Management fees and SAS executives: the Cour de cassation confirms a limited URSSAF risk
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Court of Cassation, Second Civil Chamber, June 4, 2026, No. 23-20.189, Judgment No. 593 FS-B, published in the Bulletin
By Conseil-Avocate - lawyers at the Paris and Quebec bars, Registered UAE Legal Counsel - Conseil-Avocate
Management fee agreements are widely used in French corporate structures, particularly when a holding company, a management company, or a related entity centralizes strategic, administrative, financial, or technical functions and re-bills the cost to one or more operational entities.
The ruling of June 4, 2026, does not call into question the very principle of management fee agreements. However, it illustrates a specific social security risk when the invoiced services overlap with the functions performed under the corporate mandate and are materially carried out by the same executive.
By a judgment of June 4, 2026, published in the Bulletin, the Second Civil Chamber of the Court of Cassation upheld a social security contribution (URSSAF) reassessment targeting precisely such a setup. The audited company, a simplified joint-stock company (SAS), had paid management fees to another company for general management, commercial management, and financial management services. These services were performed by the very person who already held the position of president of the audited SAS.
The Court ruled that the corresponding sums could be reintegrated into the basis for social security contributions owed by the company, without the need to establish that the president had personally received them.
For international tax practitioners, the interest of this decision goes beyond the sole URSSAF issue. It serves as a reminder that the same flow of management fees must be examined from several distinct angles (corporate law, tax law, and social security law) and that a classification accepted under one of these regimes does not necessarily secure the setup under the others. This finding is particularly important for cross-border groups using service agreements between related enterprises.
The facts: a management fees agreement within a very common structure
The dispute concerned a simplified joint-stock company (SAS) audited by URSSAF Lorraine for the 2015 and 2016 financial years. The company had entered into a management fees agreement on December 31, 2009, amended by an addendum in 2013, with a third-party company represented by the individual who was also the president and majority shareholder of the audited SAS.
Under the terms of the agreement, the service provider undertook to provide general management, commercial management, and financial management services. These services consisted of making the skills and commitment of its own president available to the audited SAS. Invoices were issued and paid during the 2015 and 2016 financial years.
URSSAF considered that the invoiced amounts in reality remunerated functions falling under the corporate office held by the president of the audited SAS. The assessment adjustment relating to management fees ultimately amounted to 49,042 euros in social security contributions, excluding late payment penalties.
The agreement is not sufficient to rule out the classification of the director's remuneration
The procedural background
Following the audit, the URSSAF sent a letter of observations on January 26, 2018.
The question of management fees was included as assessment item no. 7. A formal notice followed on June 27, 2018. The company challenged the assessment before the URSSAF's amicable recourse commission, and then before the social security court. By judgment of December 16, 2020, the judicial court of Metz upheld the assessment regarding management fees.
On June 27, 2023, the Court of Appeal of Metz partially overturned the judgment on other assessment items, but fully upheld item no. 7. The company then lodged an appeal in cassation. Before the Court of Cassation, it challenged both the recharacterization on the merits and the regularity of the audit procedure: identification of the documents consulted in the letter of observations, failure to implement the special abuse of law procedure, and failure to involve the president in the proceedings.
The analysis on the merits: services overlapping with functions performed under the corporate mandate
At the date of the audited periods, Article L. 242-1 of the French Social Security Code subjected to contributions sums paid in return for or on the occasion of work. Since the presidents and directors of simplified joint-stock companies (SAS) are compulsorily subject to the general scheme by virtue of Articles L. 311-2 and L. 311-3, 23° of the French Social Security Code, the remuneration attached to their corporate functions falls within this basis of assessment.
The question was to determine whether, given the concrete conditions of execution of the agreement, the sums invoiced by the third-party company paid for services that were actually distinct or corresponded, in substance, to the remuneration of the functions performed by the president of the SAS.
The analysis therefore had to focus on the concrete nature of the invoiced services, their relationship with the duties resulting from the corporate mandate, and the conditions under which they had actually been performed.
a. The analysis of the Court of Appeal of Metz
The Court of Appeal relied on this legal framework to assess the nature of the sums invoiced and their possible link to the president's corporate functions.
The central point lay in the functional overlap between the management fees agreement and the president's corporate mandate. The agreement covered general, commercial, and financial management services, while these same services were performed by the person already carrying out the functions of president of the beneficiary SAS. The court therefore held that the agreement duplicated the functions already performed under the corporate mandate.
The company also pointed to amendments that added technical services to the agreement. The Court of Appeal deemed these additions insufficient, since the main purpose of the agreement remained general management and supervision, commercial management, and financial management. The civil validity of the agreement itself was not in dispute before the social security judge: only the social security treatment of the sums paid in execution of this agreement was at issue.
A point of particular interest for tax practice: the company argued that the arrangement had already been accepted during a tax audit. The court dismissed the argument. Tax treatment and social security treatment fall under distinct legal regimes. The absence of adjustment by the tax administration therefore did not prevent the URSSAF from autonomously determining the social security classification of the same payments.
b. The analysis of the Court of Cassation
The Court of Cassation approved the analysis on the merits. It noted that the third-party company provided general, commercial, and financial management services by making its own president available to the audited company. The judges of the lower court could therefore deduce from this that the agreement amounted to remunerating the functions of president.
The company argued that the sums had been paid to a separate legal entity and that no finding established that the president had personally received them or had free disposal of them. The Court of Cassation rejected this plea. Since the dispute concerned only the basis of social security contributions owed by the company, the Court of Appeal was not required to find that the president had actually received the invoiced sums.
The scope of the decision must, however, be precisely circumscribed. The Court of Cassation does not lay down a general rule that any invoiced service corresponding, even partially, to management functions would automatically be subject to social security contributions. Here, it validates the assessment of the lower court judges in light of a specific setup: general, commercial, and financial management services were performed by the person who themselves carried out the functions of president of the beneficiary company.
The risk therefore appears primarily when the invoiced services overlap with the functions performed by the director of the beneficiary company and are materially performed by that same director. In such a setup, the URSSAF may consider that the fees in substance remunerate the execution of the corporate mandate.
Social reclassification and abuse of law: two distinct issues
The Court also dismissed the argument that the URSSAF should have implemented the special abuse of law procedure provided for in Article L. 243-7-2 of the Social Security Code. It states that " abuse of law therefore requires an intentional element ". Lacking proof that the company had deliberately used the agreement for the sole purpose of evading the payment of social security contributions, the reassessment did not require the use of this specific procedure.
The lesson is important : the reintegration of sums into the social security contribution base does not, in itself, imply that the agreement is deemed fictitious or constitutes an abuse of law. The URSSAF can challenge the social classification given to certain sums without having to demonstrate that the contributor intentionally set up the scheme to evade social security contributions.
A procedural shift regarding the personal liability of the director
The ruling also presents a major procedural interest, independent of the question of management fees. Until now, the Court of Cassation had ruled that when the examination of a reassessment required a ruling on the status of a director of a person to whom remuneration was awarded, that person had to be joined to the proceedings.
In its ruling of June 4, 2026, the Court expressly indicates that this case law must be "reconsidered." It notes in particular the practical difficulties it caused and the fact that reassessment litigation, by its nature, opposes the contributor against the collection agency.
It now rules that when the court is referred a dispute over a social security contribution reassessment, and not a dispute relating to a person's affiliation with a social security scheme, it is not required to join the individuals concerned or the other social protection organizations to the case.
The contributor nevertheless retains the option of calling the director in question, and the judge may order any investigative measures deemed necessary. The ruling therefore constitutes, on this point, a genuine reversal of case law.
Beyond the URSSAF: management fees under French tax law
The 2026 ruling must be distinguished from the tax treatment of management fees. The most recent reference in this matter is the Collectivision ruling (Conseil d’État, October 4, 2023, No. 466887). The Conseil d’État ruled that the fact that a company does not directly compensate its executive does not, in itself, prevent it from deciding to indirectly compensate the same person through another company.
An indirect compensation mechanism can therefore fall under normal commercial management when the competent corporate bodies have actually intended to organize it and the company receives an identifiable benefit in return. Upon remand, however, the Administrative Court of Appeal of Marseille ruled on April 3, 2025, that the taxpayer did not establish that the competent corporate bodies had actually approved the indirect compensation scheme; the deduction was denied based on the factual evidence.
The comparison with the ruling of June 4, 2026 is essential. For tax purposes, the principle of indirect compensation of the executive through another company is not, in itself, prohibited, subject notably to a proper decision by corporate bodies, an identifiable benefit in return, and deductibility rules. For social security purposes, this same flow can nevertheless be reintegrated into the contribution base when it essentially compensates functions attached to the corporate mandate. For cross-border structures between related enterprises, a separate transfer pricing analysis may additionally be required under Article 57 of the General Tax Code.
There is thus no contradiction between these case laws: they address different questions and apply autonomous bodies of law.
Where jurisdictions draw the line
Corporate law provides a third layer of analysis. In the Samo Gestion and Mecasonic cases, the Commercial Chamber of the Court of Cassation examined service agreements that duplicated functions already performed under a corporate mandate and found the lack of real consideration to be a decisive defect. These decisions, rendered before the 2016 contract law reform, were based on the former concept of "cause" and must be understood in that context.
The solution is, moreover, more nuanced regarding a simplified joint-stock company (SAS). By a ruling of November 24, 2015, the Commercial Chamber established the statutory flexibility of this corporate form and accepted that, depending on the drafting of its bylaws, a company may entrust certain management functions to a third-party provider. The presence of management services in the agreement is therefore not sufficient in itself to render it null and void.
The analysis must therefore be conducted on several levels. The corporate form, mandatory legal rules, and the bylaws help determine the functions that may be entrusted to a third party. Tax law examines in particular the business interest of the company, the reality of the consideration, and the conditions for the deductibility of the expense. Social security law, for its part, seeks to determine whether the sums constitute in substance remuneration attached to the corporate mandate. The same contractual flow can thus receive different classifications depending on the regime under consideration.
What the decision implies in practice
In practice, the decision invites a distinction to be made between intra-group services or services between related companies that are truly independent, and the functions already performed by the chairman, the chief executive officer or any other director of the beneficiary company.
Particular vigilance is required when the agreement uses broad terms such as "general management", "strategic guidance", "sales management" or "financial management", a fortiori when almost all of the services are performed personally by the person holding the corporate office. Conversely, technical or support services for IT, human resources, accounting, purchasing, treasury, compliance or specialized financial services are generally easier to distinguish from the corporate office, provided that they correspond to actual, identifiable services carried out using appropriate resources.
Documentation is therefore crucial. While the Court of Cassation has not made time sheets, detailed reports or specific deliverables legal requirements, companies must be able to demonstrate who performed the services, what was actually delivered, what resources were deployed and how the fees were calculated. The agreement, invoices, corporate authorizations and operational reality must be consistent with one another.
For international groups, the review must go further. The structure must be tested simultaneously against French deductibility rules, transfer pricing principles, the corporate offices concerned, the tax residence and substance of the service provider, as well as the social security status of the individuals actually performing the functions. A tax audit closed without adjustment must not be taken as a global validation of the structure.
Prescription and economic cost of the recovery plan
The review of existing agreements must also take into account the statute of limitations. In principle, social security contributions are subject to a three-year statute of limitations starting from the end of the calendar year for which they are due. In the context of an URSSAF audit, this period is suspended during the adversarial phase. In the event of a report certifying an illegal work offense, the recovery periods are extended to five years. The mere recharacterization of the tax base carried out by the Court of Cassation in the ruling of June 4, 2026 is therefore not sufficient, in itself, to trigger this exceptional period, which requires the confirmation of an illegal work offense under the conditions provided by the texts.
Furthermore, the reassessment can generate a cumulative economic cost without constituting double taxation in the technical sense. The SAS may become liable for contributions on a base corresponding to the fees paid to the service provider even though the executive did not personally receive them as a salary, while these fees may have simultaneously been recorded as taxable income for the service provider. The ruling does not arrange for any automatic tax neutralization: any possible accounting or tax correction must be examined separately, in light of the facts, the fiscal years concerned, and the specific time limits of each procedure.
A signal to audit existing structures
The practical scope of the ruling is circumscribed but important: when a company remunerates another entity for management functions performed by its own director and these services substantially overlap with the mandate already held by that person, the URSSAF can reintegrate the corresponding sums into the social security contribution base. The civil validity of the agreement, its tax deductibility, and its social security treatment nevertheless remain distinct issues.
For French SMEs, holding structures, and international groups, current management fees agreements must therefore be reviewed using a combined approach: corporate law, tax law, and social security law. Contractual documentation, corporate authorizations, pricing methods, invoicing, and operational substance must tell the same story. Otherwise, the existence of a written agreement will offer only limited protection.
The objective of such a review is simple: to align contractual documentation, corporate governance, tax position, social security treatment, the invoicing method, and operational reality.
The tax team of Conseil-Avocate
This article is published for general information purposes and constitutes neither legal, tax, or social security advice, nor a consultation tailored to a specific situation. Any management fees agreement must be analyzed in light of its own facts, the corporate form, the articles of association, the contractual documentation, the reality of the services, and the financial flows involved.
Sources and legal references
¹Cass. 2e civ., 4 June 2026, No. 23-20.189, judgment No. 593 FS-B, ECLI:FR:CCASS:2026:C200593, published in the Bulletin.
²CA Metz, ch. soc., 27 June 2023, No. 21/00289.
³Social Security Code, Art. L. 242-1, L. 311-2 and L. 311-3, 23°, in their wording applicable to the audited periods; Cass. 2e civ., 4 June 2026, No. 23-20.189, pts 22 and 23
⁴Social Security Code, Art. L. 243-7-2; Cass. 2e civ., 4 June 2026, No. 23-20.189, pts 9 to 11.
⁵CE, 4 October 2023, No. 466887, ECLI:FR:CECHR:2023:466887.20231004, Collectivision.
⁶CAA Marseille, 3 April 2025, No. 23MA02484.
⁷General Tax Code, Art. 57, where applicable to cross-border transactions between related enterprises.
⁸Cass. com., 14 September 2010, No. 09-16.084, Samo Gestion; Cass. com., 23 October 2012, No. 11-23.376, Mecasonic
⁹Cass. com., 24 November 2015, No. 14-19.685
