When a PFA is suitable
A PFA is generally simpler to administer and may suit an activity carried out personally on a small scale. The owner is not completely separate from the activity for liability purposes, and income tax is 10%; pension (CAS) and health insurance (CASS) contributions depend on the rules and thresholds applicable to the individual’s income.
- Simpler administration and record-keeping than a company.
- Income generated by the activity can be used directly by the owner.
- Professional qualifications and the limits applicable to the chosen activity must be checked.
When an SRL is suitable
An SRL is a separate legal entity and, in principle, limits shareholders’ liability to their contributions, without excluding liability for their own acts or guarantees they have given. It is more suitable where there is commercial risk, partners, investment, employees or plans for growth.
- Double-entry accounting and company reporting are mandatory.
- In 2026, the microenterprise regime has a 1% rate and a EUR 100,000 threshold, only if all legal conditions are met; otherwise, corporate income tax at 16% generally applies.
- Company money is not automatically the shareholder’s money; withdrawing it requires a legal basis, such as salary, expense reimbursement or dividends.
How to make the right choice
Do not compare just one tax rate. Consider expected income, deductible expenses, social contributions, VAT, accounting costs, contractual risk and how you will use the funds. A 12-month calculation provides a more realistic picture than an isolated percentage comparison.
- PFA: simplicity and an activity directly linked to the owner.
- SRL: separate assets and a better structure for growth.
- The best structure may change as revenue and business risk evolve.
Official sources
Need an assessment of your circumstances?
This is general information. The AZALL team can check your documents, activity and applicable tax regime before you make a decision.