Partner current account: operations and taxation
Verified 02 October 2025 - Directorate of Legal and Administrative Information (Prime Minister)
To meet the cash flow needs of a business, partners, officers or employees may make available to the business called funds current account advances. These advances are considered to be interest-bearing loans. Interest paid to partners is deductible from the company's profits provided certain criteria are met.
To meet its cash flow needs, the business can use different processes: capital increase, borrow from a credit institution or arrange current account advances (also called current account contributions).
The partner or officer leaves money at the disposal of the business either by paying funds or by temporarily waiving certain amounts. The current account of a partner is analyzed in a loan that gives the partner or the lending officer the status of corporate creditor.
The terms of the current account (remuneration, duration, reimbursement, etc.) are specified by the articles of association or in a current account agreement(i.e. a contract) between the business and the partner.
Who can make advances on an associate's current account?
Persons able to make so-called advances on current account and thus benefit from a associate current account are as follows:
- Partners and shareholders, natural persons regardless of the number of shares or shares held in the capital
- Leaders : director, member of the Management Board and Supervisory Board, manager, Chairman of SAS, Chief Executive Officer, Deputy Chief Executive Officer of SA or SAS
- Commercial businesses (SA: titleContent, LLC: titleContent, SAS: titleContent, SCA: titleContent) whose accounts are certified by a external auditor. These may consent, as an ancillary measure, loans less than 3 years to other businesses with which they have economic relations (this is referred to as an “intergroup loan” or a “cash pool”).
Please note
There is no partner current account in a -.
How much money can be paid into the partner's current account?
The current account is fed with one of the following ways :
- By the remuneration of the director
- By the possible dividends or refunds of fees that have not been collected
- By money deposited voluntarily by the partner, the officer
In all cases, the person making the advance on current account shall have receivable with respect to business. Current account advances are therefore recorded at passive of the business balance sheet.
When the associate current account is debtor, that is equivalent to one current account overdraft. This means that the partner owes money to the business.
He is prohibited the following persons to have a current account receivable:
- Officers and partners natural persons of a LLC: titleContent
- Directors and Chief Executive Officers of an SA and SAS: titleContent.
On the other hand, a legal person (i.e. a business) can have a current account debit. This is common in groups of businesses.
Please note
In the ICS: titleContent and in the Scop: titleContent, current accounts held by the associates natural persons may be debtors.
Associate current account is a loan granted to the business by a partner. It can therefore be remunerated, as a bank loan, by the payment of interest to this associate.
If the partner is a natural person, he is not obliged to collect interest and can freely waive it. On the other hand, where the partner who grants the current account advance is a business or an association, the current account advance is necessarily remunerated.
The interest rate shall be fixed by the Articles of Association or by the current account agreement entered into between the business and the partner.
Interest paid to members is a financial expense that is deductible from fiscal result business.
However, that deduction is limited for tax purposes by a maximum rate of deductible interest, also known as the ‘reference rate’. Its amount varies depending on the closing date the exercise of business.
Thus, when the interest rate (fixed by the articles of association or the agreement) is above the reference rate, the excess part of the interest paid to the member is not deductible taxable profit.
Closing of the financial year | Reference rate |
|---|---|
From 30 June to 30 July 2024 | 5.96% |
From 31 July to 30 August 2024 | 5.97% |
From 31 August to 29 September 2024 | 5.97% |
From 30 September to 30 October 2024 | 5.93% |
From 31 October to 29 November 2024 | 5.90% |
From 30 November to 30 December 2024 | 5.87% |
From 31 December 2024 to 30 January 2025 | 5.75% |
From 31 January 2025 to 27 February 2025 | 5.70% |
From 28 February 2025 to 30 March 2025 | 5.65% |
From 31 March to 29 April 2025 | 5.49% |
From 30 April to 30 May 2025 | 5.41% |
From 31 May to 29 June 2025 | 5.32% |
From 30 June to 30 July 2025 | 5.16% |
From 31 July to 30 August 2025 | 5.07% |
From 31 August to 29 September 2025 | 4.97% |
From 30 September to 30 October 2025 | 4.81% |
From 31 October to 29 November 2025 | 4.73% |
From 30 November to 30 December 2025 | 4.64% |
In general, the terms and conditions for the repayment of the partner's current account are specified in the statutes or in the current account agreement.
In the absence of precision, the receivable of the partner in respect of the business is refundable at any time.
When requested by the partner, the business has a 5 years from the request to repay the debt.
FYI
The partner may give up his right to reimbursement.
Can the current account refund be blocked?
Block an associate current account means that the business is no longer obliged to repay the funds contributed. The business then has real permanent capital.
This decision shall be taken either at unanimity of the general meeting of shareholders, i.e. blocking convention (a contract) signed between the business and the partner. It thus serves as warranty in connection with the granting of loans by a banking institution.
Can the business refuse to repay the current account?
When the partner claims reimbursement of his current account, the business can't refuse it (even due to financial difficulties). Nor can it limit repayment to the amount that its cash flow can bear.
On the other hand, the business may claim payment terms (limited to 2 years) to repay the current account.
What happens if the business is wound up or liquidated?
After opening a collective procedureHowever, the business is no longer entitled to repay an associate current account. The partner must therefore, like any creditor, declare its claim with the judicial representative or judicial liquidator.
In this case, the partner is reimbursed after the preferred creditors business and if the finances of the business allow it.
The applicable tax rules the partner current accounts are different for the business receiving the advances and the partner holding the current account.
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Beneficiary business
The interest paid to the partner shall be financial expenses deductible from profit or loss of the company provided that the company complies with the 2 conditions following:
- The share capital is fully released (i.e. the partners must have paid all of their input to the capital of the company).
- The interest rate charged shall not exceed reference rate (refers to the gross rate before tax)
FYI
Where the interest rate fixed is above the reference rate, the excess part shall constitute a non-deductible expense the benefit of the business. Each current account must be examined separately and there can be no compensation between an excess of interest recorded for one current account and an insufficiency for another.
Furthermore, current account advances constitute a form of loan.
The company benefiting from it must thus deposit every year a declaration of loan agreement (cerfa no. 10142), at the latest on the date of filing of its declaration of result.
Associate
Taxation is different depending on whether the partner holding the current account is a natural person or a legal person.
Associate natural person
The interest received by the natural person partner constitutes income from movable capital.
They are imposed on the Single flat-rate levy (SSF)of 30% or at progressive income tax (IR) scale.
Partner legal person (business or association)
When the business is subject to business tax (IS), the interest received by the partner is financial income taxed on business tax (IS).
However, when the company has opted for income tax (IR), the interest collected is taxed on account ofincome tax (IR)in the category of industrial and commercial benefits (BIC)).
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Deduction of interest from shareholders' current accounts from business' net income
Interest on money left or made available to a company by a related company, directly or indirectly
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