Associate's current account status

An associate's current account is a financial claim against the company, making the associate a general creditor rather than a shareholder. This means the funds in the account do not add to the company's equity or provide additional voting rights.

Legal implications of the current account

The commercial chamber emphasized that the approval of accounts by a general meeting is not required for reimbursement. Two main situations can block reimbursement: a specific blocking agreement or the opening of a collective procedure. Outside these, only clearly abusive requests can be denied, requiring proof of harmful intent.

Regulated conventions and formalization

Current account agreements are generally subject to regulated convention procedures outlined in the Commerce Code. However, if the agreement is part of routine operations under normal conditions, it may be exempt. Written formalization, including terms and conditions, is strongly recommended to protect both the company and the associate.

Interest deduction limitations

The general law limits the deduction of interest paid to associates. The capital must be fully released, and the interest rate must not exceed the average rate set by credit institutions. For the 2025 fiscal year, this rate was 4.55%, and it decreases slightly in 2026. These limits are calculated per account, and there is no compensation between accounts.

Taxation of interest for associates

Interest received by associates is considered income from movable capital, taxed at a flat rate of 31.40% in 2026. A 12.80% tax is withheld at source by the company, with the option to switch to a progressive tax scale. For certain managers, the interest is added to their social security contributions if it exceeds 10% of the share capital.

Reversing the balance and legal risks

If the associate owes the company money, the situation is legally distinct. Loans or guarantees to associates are prohibited under the Commerce Code, and such agreements are considered null and void. This can lead to criminal penalties, including imprisonment and fines, and may trigger a collective procedure if asset mixing is suspected.

Tax treatment of reversed balances

When an associate owes the company, the funds are treated as distributed income, subject to income tax. The company must charge interest on these advances, or it may be seen as abnormal management. The associate is taxed on the amount, with potential increases in the taxable base.

Abandoning a current account

Abandoning a current account can help improve a company’s equity. The company treats this as taxable income, which may be offset by carryforwards. For legal person associates, such abandonments are generally not deductible, except in specific cases like company reorganization. For non-professional individuals, the loss is not deductible from total income.

Key considerations for ongoing cases

Three factors are crucial in ongoing current account cases: the existence of a written agreement, the full release of capital, and the impact of the 10% threshold for non-salaried managers. These factors must be addressed together and before any distributions are made.