#Director Remuneration and Tax Optimisation Lawyer in France

Director Remuneration and Tax Optimisation Lawyer in France

Every year, a company director has to strike a balance between remuneration, dividends, protection cover, retirement, succession and the structuring of their wealth. These choices combine personal taxation, corporate taxation, social security contributions and company law rules. A consistent strategy, documented and compliant with the law, makes it possible to control the overall burden without resorting to questionable schemes. Our firm assists directors of SMEs, mid-sized companies, family holding companies and entrepreneurs in analysing and implementing their personal tax strategy.

This page sets out the main lawful levers for structuring a director’s tax position: choice of remuneration method, contribution and sale (apport-cession) and Dutreil pact arrangements, interposition of a holding company, retirement savings, expatriation and succession. Each arrangement has its own conditions, limits and risks; it requires a prior analysis of your situation and personal objectives.

Salary vs dividends in France: how should a director choose?

For the company, the director’s remuneration is an expense deductible from the profit subject to corporate income tax (IS); it gives rise to social security contributions (general scheme for minority or equal-share managers (gérants) of an SARL (limited liability company) and for directors of an SAS (simplified joint-stock company) or SA (public limited company); self-employed (TNS) scheme for majority managers of an SARL). For the director, it is taxed at the progressive income tax rates after a 10% allowance for professional expenses, subject to a cap.

Dividends are paid out of profits after corporate income tax. They are subject to the flat tax (PFU): 12.8% income tax (Article 200 A of the French Tax Code (CGI) (in French)), plus, for 2026 income, 18.6% social levies, i.e. 31.4% in total; or, by election, to the progressive income tax rates with a 40% allowance (Article 158 3° CGI). Majority managers of an SARL pay self-employed (TNS) social security contributions on the portion of dividends exceeding 10% of the aggregate of the share capital, share premiums and sums paid into shareholder current accounts (Articles L. 131-6 and L. 136-3 of the French Social Security Code (in French) (Code de la sécurité sociale)).

The choice between remuneration and dividends depends on the household’s marginal tax rate, your personal situation and the company’s strategy (cash requirements, financing of investments, building up reserves). Our role is to prepare a multi-year quantified comparison before any decision is taken.

Using a holding company: objectives and limits

Interposing a holding company serves several objectives: centralising cash, leverage for new acquisitions, organising governance, preparing succession. For tax purposes, the holding company benefits from the parent-subsidiary regime (Articles 145 and 216 CGI), which exempts from corporate income tax 95% of the dividends paid up by subsidiaries (with a 5% share of costs and expenses added back). The tax consolidation regime (Articles 223 A et seq. CGI) allows, by election, the profits and losses of group companies to be offset against each other.

Contribution and sale to a holding company (apport-cession, Article 150-0 B ter CGI) is a powerful structuring tool. The director contributes their shares to a holding company subject to corporate income tax (IS) which they control, and the capital gain is placed in tax deferral. If the holding company sells the contributed shares within three years, it must, within three years of the sale, reinvest at least 70% of the proceeds in an eligible economic activity (an operating activity or a subscription to the capital of an operating company, subject to conditions), then hold these investments for at least five years. These rules apply to sales carried out since 21 February 2026 (Article 150-0 B ter of the CGI (in French)). Failure to meet this obligation makes the tax payable, with late-payment interest.

Intra-group agreements (management fees, royalties, cash management agreements) must be documented, justified and concluded on arm’s length terms. If they are challenged in a tax audit or by a minority shareholder, this may lead to a reassessment and interest, or even to a finding of an abnormal management act (acte anormal de gestion). Case law of the commercial chamber of the French Supreme Court (Cour de cassation) and of the Conseil d’État regularly clarifies the applicable conditions.

Dutreil pact: passing on a business by gift or inheritance

The Dutreil pact (Article 787 B of the CGI (in French)) exempts shares transferred by gift or on death from gift and inheritance tax, up to 75% of their value. Its conditions are precise: a collective holding commitment of at least two years covering at least 17% of the financial rights and 34% of the voting rights for unlisted companies, followed by an individual holding commitment of six years by each beneficiary, and the exercise of a management function in the company during the collective commitment and for the three years following the transfer.

The company must carry on an operating activity (industrial, commercial, craft, agricultural or professional). Active holding companies (holdings animatrices) also qualify, provided they can show that they effectively and continuously direct their subsidiaries (recent judgments of the French Supreme Court and BOFiP tax authority guidance). We secure sensitive cases by drafting a group management agreement (convention d’animation) and, where appropriate, by applying for an advance tax ruling (Article L. 80 B of the French Tax Procedure Code (in French) (Livre des procédures fiscales, LPF)).

Allowance for directors retiring from their company

Article 150-0 D ter of the CGI provides, subject to conditions, for a fixed allowance of €500,000 on the capital gain on the sale of shares when the director retires. The conditions relate to the seller (management function held for at least five years before the sale), the company (SME within the meaning of EU law, operating activity), the holding period, and the seller’s exit (cessation of all functions in the company and retirement within the two years before or after the sale).

The allowance can be combined with other tax regimes (contribution and sale, Dutreil pact) but is subject to strict rules on cumulation. We analyse, case by case, the optimal sequence between cessation of functions, sale of the shares and valuation, in order to secure the application of the allowance.

Retirement savings and deferred remuneration

The retirement savings plan (PER, plan d’épargne retraite) introduced by the PACTE Act is a central instrument: contributions are deductible from taxable income within the ceiling of Article 163 quatervicies CGI, investments grow free of tax, and on retirement the plan pays out as a lump sum or an annuity. For self-employed (TNS) directors, older Madelin contracts can be kept or transferred.

Other tools exist: protection cover and supplementary health insurance, severance payments, buying back pension quarters, coordination between compulsory and voluntary schemes. Each arrangement has specific tax rules on exit, which should be anticipated from the outset.

Expatriation and international taxation of directors

Moving your tax domicile out of France triggers the exit tax (Article 167 bis CGI) on unrealised capital gains on shareholdings above certain thresholds. A payment deferral is granted automatically on a move to a European Union Member State, and on request and against security in other cases. Specific rules apply if you return to France.

Inbound directors may benefit from the regime of Article 155 B of the CGI: income tax exemption on the inbound expatriation bonus (prime d’impatriation) and, subject to conditions, on the portion of remuneration relating to assignments abroad. This regime is limited in time. Bilateral tax treaties allocate taxing rights between States and in principle give entitlement to a tax credit to avoid double taxation.

Securing your position: documentation, tax rulings and audits

Tax optimisation cannot rely on artificial schemes. Abuse of law (abus de droit), defined in Articles L. 64 and L. 64 A of the LPF, means the use of sham acts or of acts whose purpose is exclusively (L. 64) or mainly (L. 64 A) tax-driven; abuse of law under Article L. 64 is penalised by an 80% surcharge, reduced to 40% in certain cases (Article 1729 b of the CGI). The firm assesses each structure against this boundary and favours arrangements expressly provided for by law (Dutreil pact, contribution and sale, allowance for retiring directors, parent-subsidiary regime, tax consolidation).

Documenting your choices is decisive: intra-group agreements, management reports, shareholder resolutions, expert reports. An advance tax ruling (rescrit), when obtained under the conditions of Article L. 80 B LPF, offers maximum legal certainty. In the event of an audit, we conduct your defence before the auditing department, the direct tax commission (commission des impôts directs) and, where necessary, the tax courts.

How our firm assists you

Our tax team acts upstream, over time and in the event of an audit. We coordinate director tax optimisation with personal taxation, corporate taxation, corporate law and groups of companies matters. This coordination covers the structuring phase, the drafting of documents and multi-year follow-up.

To present your situation and consider the possible options, please contact us using the firm’s contact form. An initial discussion helps identify the issues at stake and the next steps.

Frequently asked questions

Salary or dividends: how should I choose?

The choice depends on the director’s marginal tax rate, social security scheme (self-employed TNS or general scheme), the company’s distribution policy and personal needs. A multi-year quantified comparison that takes into account social security contributions, pension rights, personal taxation and corporate taxation helps identify the optimal mix year by year.

What is contribution and sale (apport-cession) and who is it for?

Contribution and sale consists of contributing your shares to a holding company subject to corporate income tax (IS) which you control; the capital gain is placed in tax deferral (Article 150-0 B ter CGI). It is aimed at directors considering the sale of their company who wish to reinvest all or part of the price in new economic projects. The reinvestment obligation is strict: 70% of the proceeds if the shares are sold within three years, to be reinvested within three years, with the investments held for at least five years (sales carried out since 21 February 2026).

What are the conditions of the Dutreil pact?

A collective holding commitment (minimum two years) covering 17% of the financial rights and 34% of the voting rights for unlisted companies, an individual holding commitment (six years by each beneficiary), a management function held during the collective commitment and for three years after the transfer, and an operating activity (or active holding company). The exemption applies to 75% of the value of the shares transferred.

Can I combine several arrangements?

Yes, several arrangements can be combined (contribution and sale, Dutreil pact, allowance for retiring directors), but each combination is subject to precise cumulation rules. A prior analysis of the order and timing of the transactions is essential to secure the application of each regime.

Is an active holding company compatible with the Dutreil pact?

Yes. Shares in active holding companies qualify for the Dutreil regime when the holding company actively takes part in conducting the group’s policy and in controlling its subsidiaries, and provides them with administrative, legal, accounting or financial services. Demonstrating effective and continuous group management is a point of vigilance; it must be documented (group management agreement, reports, minutes).

What is abuse of law in French tax matters?

Under Article L. 64 of the LPF, abuse of law consists of sham acts or of acts which, seeking a literal application of the texts contrary to their objectives, can only have been motivated by the aim of evading or reducing tax; Article L. 64 A targets acts for which this is the main motive. Abuse of law under Article L. 64 is penalised by an 80% surcharge, reduced to 40% where the taxpayer neither took the main initiative nor was the main beneficiary (Article 1729 b of the CGI). Any optimisation must rest on genuine economic logic, substantial legal effects and solid documentation in order to withstand an audit.

How can a tax optimisation structure be secured?

Through an advance tax ruling (Article L. 80 B of the LPF) where the situation allows, rigorous documentation of acts and agreements, the use of arrangements expressly provided for by law, and monitoring of case law and tax authority guidance. Legal certainty comes from combining these elements, not from any one of them alone.

What should I do if a tax audit targets my personal transactions?

As soon as you receive the notice of an in-depth audit of your personal tax situation (ESFP) or the proposed reassessment, a tax lawyer steps in: checking procedural rules (taxpayer safeguards, the Taxpayer’s Charter), analysing the merits, building a reasoned response, an appeal to the auditor’s superiors if necessary, and referral to the commission or the tax court. A fast and structured response is essential.

Every situation is different: the information on this page is general and does not replace legal advice tailored to your case. The firm makes no promise of outcome; it commits to the means it deploys.