Hold on to your SEL: the tax regime for directors’ remuneration changes for 2024!
From 1 January 2024, income received by partners of an SEL (société d’exercice libéral, a company through which a regulated liberal profession is practised) will be taxable as non-commercial profits (bénéfices non commerciaux, BNC), unless a relationship of subordination to the company, characterising salaried employment, can be demonstrated.
This change follows the tax authorities’ abandonment of their concession, which still applies to 2023 income. They are thus falling into line with the case law of the Conseil d’État (France’s highest administrative court), which had already held for several years that the remuneration of liberal professionals had to be taxed as BNC, whatever their form of practice, in the absence of a relationship of subordination.
Presidents of SELASs and managers of SELARLs will therefore no longer be taxed in the wages and salaries category, with the 10% deduction for professional expenses, on income received from 2024 onwards in respect of their technical liberal professional function.
Only the portion remunerating the corporate office may remain subject to income tax in the wages and salaries category. As a concession, and failing evidence of a higher portion, 5% of the director’s remuneration will be deemed to relate to the corporate office and will therefore be taxable as wages and salaries.
From 2025 (for 2024 income), liberal professionals will therefore have to:
– Report at least 5% of their remuneration on their income tax return as Salaries or Managers’ remuneration;
– For the remaining 95%:
either apply the micro-BNC regime (with a 34% flat-rate deduction covering all expenses), provided that receipts do not exceed 77,700 €;
or file a BNC return (form no. 2035) if receipts exceed the 77,700 € threshold or if expenses exceed the 34% deduction (déclaration contrôlée regime). If social security contributions continue to be borne by the company, they will constitute additional taxable remuneration for the director;
The tax authorities have indicated that they are working on adding a line to the income tax return to limit the complexity caused by this change, but it is not expected to appear before May 2026 (taxation of 2025 income).
The director will not be liable for VAT or CFE (business property contribution), but will have to invoice their fees, which must be duly declared by the SEL (return of fees, commissions and brokerage, Article 240 of the French Tax Code, CGI).
Liberal professionals who have lawfully been able to practise through an ordinary company (SAS and SARL), particularly in the legal and chartered accountancy fields, are not affected by these changes for the time being. However, they will have to amend the articles of association of their structure before 31 August 2025 to bring them into line with the rules applicable to SELs (Ordinance no. 2023-77 of 8/02/2023, Article 132).
In short, the remuneration of a liberal professional who is a partner in an SEL will henceforth be taxed as BNC. Only a 5% portion relating to the corporate office may possibly remain taxed as wages and salaries, with the 10% deduction applied.
Liberal professionals practising through SARLs and SASs are not affected by this change but will have to convert their structure into an SEL by 31 August 2025 at the latest.