France Update: SPFPL, Dividends and Social Security Contributions

A decision of the Court of Cassation of October 19, 2023 (No. 21-20.366)) had sounded like an earthquake among the liberal professions by concluding that dividends paid to a financial holding company of the liberal professions (SPFPL) by its subsidiary (100%) constituted in the form of a liberal practice company (SEL) were subject to social security contributions. The porosity of the boundary between capital income and labour income, for the liberal professions, was then brought to its peak.

A ministerial response to a senatorial question (asked by Mr Jean-Claude Anglars), published on 27 February 2025, is intended to help clarify the scope of this decision. The Ministry of Labour, Health, Solidarity and Families, in charge of labour and employment, states that the above-mentioned judgment does not call into question the definition of the basis of assessment for social security contributions for the liberal professions:

• Indeed, since 2009, Article L. 131-6 of the Social Security Code provides for the reintegration into the contribution base of self-employed workers of dividends distributed by their company and received above a certain threshold; This principle is, according to the Minister, justified by the fact that above a certain level, dividends paid by a company to a self-employed worker may be considered as a refund of part of the employment income of this self-employed worker;

• In the present case, the above-mentioned judgment related to a particular situation, in which the sole manager and sole practitioner within the SELARL, thus ensuring all the liberal activity of this company, redistributed part of the profits in the form of dividends to the SPFPL holding the SELARL, of which he was also the sole holder with his wife; according to the Minister, the Court therefore intended, on the basis of Article L. 131-6 of the Social Security Code, to draw the appropriate conclusions from a specific situation in which the interposition of a holding company could not have had any other purpose than to circumvent the legislation on the reintegration of certain dividends distributed to a self-employed worker into the basis of assessment of social security contributions and contributions.

According to this ministerial response, the “earthquake” judgment of 19 October 2023 cannot be considered as a landmark judgment from which general legal conclusions could be drawn, which would have been reminded by the State to the bodies responsible for the collection of social security contributions and contributions.

One question remains, however: where should we place the cursor of tolerated “optimization”? Doesn’t this decision enact a principle for all SELs/SPFPLs with a single shareholder? This ministerial response has the merit, at this stage, of provisionally reassuring liberal professionals working in multi-person SELs about the fate of the dividends distributed by their SEL to their SPFPL, which should escape any reintegration into the basis of their social security contributions.

Ginestié Magellan Paley-Vincent, France, a Transatlantic Law International Affiliated Firm.  

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