Tax rule for technical remuneration defined

The principle of technical remuneration falling under the non-commercial profits (BNC) regime is outlined in the rescrit BOI-RES-BNC-000136, published on 27 December 2023 and modified on 24 April 2024. This document refers to a ministerial response from 1996, which recognized the taxation of associates who are not directors of liberal practice companies as wages and salaries.

Exemptions and specific cases

Since the 2024 income taxation, remuneration received by an associate for the liberal activity they perform within and on behalf of the company falls under non-commercial profits, based on Article 92 of the CGI. However, three situations are exempt: when a subordination link exists, such as for an employee lawyer; for management mandates of SELARL or SELCA managers under Article 62 of the CGI; and for certain roles under Article 80 ter of the CGI.

Legal confirmation and annulled provisions

By a decision of 8 April 2025 (No. 492154), the 8th and 3rd chambers of the Council of State ruled on appeals against the rescrit. The Council confirmed the legality of the BNC taxation principle and the coexistence of two remunerations for certain roles. It also annulled parts of BOI-RSA-GER-10-30, which had allowed a flat-rate allocation and listed specific tasks.

Fallback rule and its implications

The BOFiP maintains a fallback rule that, when remuneration for a liberal activity cannot be distinguished from that of a manager, it is taxed under Article 62 of the CGI. For a majority manager of SELARL, this means the entire remuneration falls under Article 62. This shifts the associate away from the BNC regime, which offers greater deductibility of certain charges.

Deductible expenses under the new regime

The associate under the controlled declaration regime can deduct expenses necessary for the exercise of their technical function, including mandatory social contributions, Madelin contributions, transportation costs, and interest on loans for acquiring shares. These deductions are not available under other regimes, offering a key benefit for associates who financed their entry into the company's capital.

Administrative requirements and changes

The associate must maintain a journal of receipts and expenses and submit a specific declaration. The transition from a withholding to a contemporaneous advance requires updating procedures. Several changes in tax law, including the abolition of certain articles in the CGI, have rendered some previous notes inaccurate.

Updated micro-BNC threshold and regime preferences

The micro-BNC threshold is raised to 83,600 euros for the triennial period 2026-2028, with a flat-rate deduction of 34%. The controlled declaration remains preferable for associates due to higher actual social contributions compared to flat-rate deductions. The rescrit clarifies that technical remuneration is not subject to VAT, and the reservation applies to specific activities.

Revised social security contributions and legal rulings

Article L131-6 of the Social Security Code reintroduces certain income shares into the base of contributions for independent workers. Legal rulings have tightened the rules, such as the Court of Cassation's decision that dividends paid to a financial company are included in the associate’s contribution base. The Constitutional Council rejected challenges to this rule, making the effect automatic for many small companies.