Why are executives drawn to the financing quietly offered through the partner account?

Often viewed as a technical mechanism, the shareholder checking account is once again gaining particular appeal. Against a backdrop of higher interest rates and selective bank financing, it serves as a discreet yet powerful tool for strengthening an SME’s cash flow without disrupting its capital structure. However, it is essential to understand the tax and estate planning rules involved.

A Flexible Tool for Businesses
The principle behind the shareholder checking account is simple: a shareholder lends money to their company without going through a capital increase. Unlike a capital increase, this arrangement does not alter the distribution of capital or voting rights. A minority shareholder can therefore support the company without gaining additional power.
 

This mechanism is widely used in SARLs, SASs, and SAs, as well as in certain SCIs. It is a flexible form of internal financing, often set up to help a company navigate a difficult period, improve its cash flow, or reassure a bank when applying for a loan.
 

With interest rates rising since 2022, the appeal has increased: for a closing date of June 30, 2025, the maximum rate allowed by the tax authorities is 5.32%. At this level, the interest paid is significant and tax-advantaged.

Tax-advantaged, but caution is needed
One of the major advantages of the partner’s checking account is its dual tax treatment:
• For the company, the interest paid is deductible from taxable income, reducing corporate income tax (CIT).
• For the partner, this interest constitutes investment income, taxed at a flat rate of 30%, unless the partner opts for the progressive tax scale.
  

This arrangement is more favorable than a dividend payment—which is not tax-deductible for the company—or a year-end bonus, which is often subject to payroll taxes. This is also the case for real estate investment companies (SCIs) subject to income tax, where the flat-rate tax of 12.8% on interest can be significantly lower than the household’s marginal tax rate.
 

But tax efficiency should not overshadow the legal risks. By default, deposited funds are repayable at any time. To safeguard their cash flow, executives would be wise to sign a lock-up agreement specifying a minimum term. This sends a strong signal to creditors—particularly banks—who view it as a sign of financial stability.
 

Finally, certain situations require special attention:
• Waiver of a claim: If a partner waives their claim to the operating account, this creates taxable extraordinary income for the company. A “return to better fortune” clause must then be included to protect the partner.
• Inheritance: Upon the death of a partner, the operating account becomes part of the estate and must be distributed among the heirs.
• Divorce: Under the community property regime, a contribution to a partner’s checking account is presumed to be community property, even if only one spouse provided the majority of the funds, which can lead to disputes.

“The partner’s checking account—often misunderstood or underutilized—deserves the full attention of executives and partners at SMEs, micro-enterprises, and real estate investment companies (SCIs),” emphasizes Bertrand Sers, a tax partner at Walter France. “Provided one understands its rules and nuances, it serves as a powerful tool for financing and tax optimization, one that should be fully integrated into the company’s management and compensation strategy.”