The workings and taxes of an EIRL 

Since 1 January 2011, a self-employed individual can, without creating a legal entity, set up a limited liability sole proprietorship and allocate his or her specific assets, which can only be seized by creditors, i.e. the affected assets.

 

Who is it for? The EIRL regime applies to any individual entrepreneur, regardless of the nature of his or her activity (trader, craft industry, agriculture, liberal profession, commercial agent).

1. The assets affected.

These assets consist of all the goods, rights, obligations and securities held by the EIRL. A declaration must be made to the legal publicity register to which the sole trader is required to register.

Impact: In the event of collective proceedings, only the professional assets are covered.

 

2. The obligations of the EIRL

– Keeping independent accounts

– Publishing a balance sheet-

-Opening a bank account

– Declaring the assets

 

3. The EIRL’s tax regime

The EIRL offers a choice between income tax (IR) and corporation tax (IS).

 

IR. Advantages and disadvantages

Advantages	Disadvantages
If the activity is loss-making, the IR option makes it possible to offset the household’s other tax income.	If the EIRL’s profit is significant, it will be taxed at almost 45%.   It will be subject to the social security contributions of non-salaried workers, which represent between 20% and 45% of the profit.

 

IS. Advantages and disadvantages

Advantages	Disadvantages
The IS is equal to 15% of the taxable profit up to €38,120 of profit. Then it is equal to 28% for the part of the profit below €500,000 and 31% above that.	You are only able to create or cancel the IS once, so this may prove difficult.

 

 

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