EURL: Corporate Tax or Income Tax? The 2025 Guide
Creating an EURL means choosing a structure that offers two radically different tax options. By default, the EURL is taxed under personal income tax (IR). You can opt for corporate tax (IS). This choice impacts your net income, dividend strategy and long-term tax position.
EURL under income tax (IR): the default regime
By default, the EURL is a "pass-through" entity: its profits are directly included in your personal tax return, as if you were a sole trader. You are taxed at the progressive income tax scale on the full profit, whether you distribute it to yourself or not.
2025 income tax brackets (per household share):
| Bracket | Rate |
|---|---|
| Up to €11,497 | 0% |
| €11,497 to €29,315 | 11% |
| €29,315 to €83,823 | 30% |
| €83,823 to €180,294 | 41% |
| Above €180,294 | 45% |
Advantages of IR:
- Losses can be offset against your overall income (useful in early years with losses)
- No corporate tax on reinvested profits
- Simple if your profit remains modest
Disadvantages:
- Taxed even on undistributed profits
- Potentially high marginal rate if income is significant
- No flat tax on dividends (all profit treated as personal income)
The IS option: the corporate mechanics
By opting for IS, the EURL becomes fiscally a capital company. The business pays tax on its profits, and you are only taxed personally on what you pay yourself (salary or dividends).
2025 corporate tax rates:
- 15% on the first €42,500 of profit (reduced SME rate)
- 25% beyond
The 30% flat tax on dividends — but beware in an EURL:
In a SASU, all dividends are subject to the 30% flat tax (12.8% IR + 17.2% social levies). In an EURL, it is different: dividends that exceed 10% of share capital plus current account contributions are subject to TNS social contributions (~40%) rather than the flat tax. This is the major trap of the EURL under IS.
Comparative simulation: EURL IR vs IS
EURL, taxable profit €80,000, single manager
Under IR:
- Profit fully taxed at progressive rate: 30% marginal bracket
- TNS contributions already deducted (calculated on remuneration)
- Approximate income tax on €80,000: ~€18,000
- Net after IR: ~€62,000 (excluding TNS contributions already paid)
Under IS (€50,000 remuneration, dividends on the rest):
- TNS contributions on €50,000: ~€21,000
- Pre-tax profit: 80,000 - 50,000 - 21,000 = €9,000
- Corporate tax at 15%: €1,350
- Distributable profit: €7,650
- If dividends exceed 10% of capital → TNS contributions (~40%): €3,060 → Net dividends: €4,590
- Income tax on net salary (€50,000 - €21,000 = €29,000): ~€4,000
- Total net: ~€25,000 + €4,590 = ~€29,590 (~37% of profit)
In this example, IR is significantly more advantageous because profit is moderate and dividends attract TNS contributions in an EURL.
When does IS make sense in an EURL?
IS is advantageous in specific cases:
1. You reinvest profits in the business: taxed at only 15% (vs 30–41% under IR)
2. You have high share capital: dividends within 10% of capital are subject to the 30% flat tax (not TNS)
3. Very high profit: beyond €80,000–100,000 in profit, IS can become competitive
4. Exit strategy: an EURL under IS can be sold with advantageous tax mechanisms
Switching regimes: is it possible?
IR → IS: the IS option can be made at any time, taking effect on 1 January of the following fiscal year (or at business creation).
IS → IR: the return to IR is only possible within the first 5 years after opting for IS. Beyond that, IS is permanent for the EURL.
Our recommendation
For most EURLs where the manager draws out all profits, IR is often more advantageous, particularly in the start-up phase. IS makes most sense when you accumulate profits in the company without distributing them, or when you plan to sell the business eventually.
Compare your situation with our status comparator and, above all, consult a chartered accountant before deciding — it is a choice with lasting consequences.