Management Fees and URSSAF Risk in France: When an Intragroup Services Agreement Becomes Executive Compensation

The case involved a company that paid fees to a third-party company under a management agreement. Both companies were represented by the same individual. The third-party company made available to the paying SAS its own president for general management, commercial management, and financial management services.

URSSAF considered that the fees did not remunerate an autonomous external service. They remunerated the functions of the president of the controlled company.

The Cour de cassation validated the social security reassessment.

The practical lesson is clear:

A management fee is not protected by its contractual label. If the services overlap with the normal scope of the corporate officer’s mandate, URSSAF may reclassify the amounts as remuneration subject to social security contributions.

Executive Summary

Management fees are common in corporate groups.

Parent companies, holding companies, management companies, or consulting entities often invoice subsidiaries or related companies for strategic, financial, commercial, administrative, or executive services.

These arrangements can be legitimate.

However, they become risky when the invoiced services overlap with the legal functions of a corporate officer, especially where the same person controls or represents both companies.

In its decision of June 4, 2026, the Second Civil Chamber of the French Cour de cassation confirmed that URSSAF may reintegrate management fees into the social security contribution base of a French SAS when the fees actually remunerate the functions of the company’s president.

The case is particularly important for CEOs, CFOs, founders, private equity-backed groups, holding companies, family groups, and legal departments because it illustrates a growing risk:

A contractually clean intragroup services agreement may still be challenged if its economic reality corresponds to executive compensation.

The decision also clarifies two procedural points:

• URSSAF does not necessarily have to use the social security abuse-of-law procedure when it merely reclassifies the legal nature of the sums and does not rely on an exclusively evasive intention.
• The court hearing a challenge to a social security reassessment is not required to call the individual executive into the proceedings when the dispute concerns the validity of the reassessment, not the executive’s affiliation status.

Direct Answer

Can URSSAF reclassify management fees as executive compensation in France?

Yes.

URSSAF can reclassify sums paid under a management services agreement as executive compensation when the services invoiced by a third-party company actually correspond to the functions normally exercised by the president or corporate officer of the company paying the fees.

In that case, the sums may be included in the social security contribution base under the regime applicable to SAS executives.

Why This Decision Matters

This decision matters because management fees are often treated as a tax, accounting, or corporate-law topic.

The June 4, 2026 ruling shows that they are also a social security risk.

For many corporate groups, management fees are used to centralize leadership, finance, strategy, business development, and support functions.

A typical structure may look like this:

• a holding company or management company invoices operating subsidiaries;
• the same founder or executive manages several entities;
• one company bears the cost of executive leadership through management fees;
• no direct salary is paid by the operating company to the executive;
• the invoiced amounts are booked as service fees.

This can be legitimate where real, distinct, and autonomous services are provided.

The risk arises when the invoiced services are not truly external services, but the practical exercise of a corporate mandate.

When that happens, URSSAF may look through the contract and analyze the real nature of the flow.

The Case Behind the June 4, 2026 Decision

The case concerned a French SAS that had entered into a management agreement with a third-party company.

Both companies were represented by the same individual.

Under the agreement, the third-party company made available to the SAS management services covering:

• general management;
• commercial management;
• financial management.

URSSAF conducted a control covering the years 2015 and 2016.

Following the control, URSSAF issued a letter of observations in January 2018 and then a formal notice in June 2018.

The reassessment concerned amounts paid by the SAS under the management agreement.

URSSAF considered that the agreement effectively remunerated the functions of the president of the SAS.

The court of appeal validated the reassessment.

The Cour de cassation rejected the company’s appeal.

The Core Legal Issue

The legal issue was not whether management fees are always illegal.

They are not.

The issue was whether the services invoiced under the management agreement were genuinely distinct from the corporate officer’s functions.

The distinction is fundamental.

A company may pay for real services provided by another company.

However, it cannot use a services agreement to remunerate the functions of its own president while avoiding the social security contribution regime applicable to that executive.

The Cour de cassation validated the reasoning that the management agreement, in substance, remunerated the president’s corporate functions.

As a result, the amounts invoiced had to be included in the contribution base.

Key Legal Rule

What rule does the decision establish?

The rule can be summarized as follows:

When a management services agreement between related companies, represented by the same person, remunerates tasks corresponding to the normal functions of the president of a French SAS, the invoiced sums may be treated as executive compensation and included in the social security contribution base.

The decisive factor is not the contractual label.

The decisive factor is the actual function remunerated by the payment.

Why the Contractual Label Is Not Enough

Many companies assume that a written agreement, invoices, and accounting treatment are sufficient to secure management fees.

The June 4, 2026 decision shows why that assumption is dangerous.

URSSAF and the courts may examine:

• who actually performs the services;
• what functions are performed;
• whether the services are distinct from the corporate mandate;
• whether the paying company already has a president or executive legally responsible for those functions;
• whether the same individual represents both companies;
• whether the services are autonomous and measurable;
• whether the invoices correspond to specific services or broad executive leadership;
• and whether the arrangement effectively remunerates the executive’s mandate.

A management agreement is therefore not assessed only by its wording.

It is assessed by its economic and functional reality.

Why This Is Particularly Relevant for SAS Presidents

In a French SAS, the president is affiliated with the general social security scheme when remunerated.

This makes the distinction between service fees and executive compensation particularly important.

If fees invoiced by a related company actually correspond to the president’s functions, URSSAF may argue that the paying SAS has effectively remunerated its president indirectly.

The result can be costly:

• reintegration of the amounts into the social security contribution base;
• additional employer and employee contributions;
• late-payment increases;
• penalties where applicable;
• litigation costs;
• and potential impacts on related tax and accounting positions.

What Makes a Management Fee Risky?

A management fee becomes risky when several indicators converge.

Same Individual Managing Both Companies

The risk increases when the service provider and the client company are represented or controlled by the same person.

This does not automatically make the arrangement unlawful.

However, it makes the substance analysis more sensitive.

Services Covering Core Executive Functions

General management, commercial management, and financial management are high-risk categories when they overlap with the president’s normal role.

If the services correspond to the company’s strategic leadership, day-to-day management, or legal representation, URSSAF may question whether they are truly external services.

Lack of Distinct Deliverables

A services agreement is easier to defend when the provider delivers identifiable, measurable, and documented services.

It is more vulnerable when the invoices refer broadly to “management,” “strategy,” “direction,” or “coordination” without operational detail.

Absence of Evidence

A management fee is harder to defend without evidence of actual services.

Useful evidence may include:

• reports;
• dashboards;
• deliverables;
• board materials;
• financial analyses;
• business development files;
• project management records;
• time records;
• emails documenting specific work;
• meeting minutes;
• and service-level descriptions.

Overlap With the Corporate Mandate

This is the central risk.

If the invoiced services merely reproduce what the president is legally expected to do, the arrangement may be requalified.

What the Decision Does Not Say

The decision should not be overread.

It does not mean that all management fees are subject to social security contributions.

It does not prohibit services agreements between related companies.

It does not prevent a holding company from providing genuine administrative, financial, legal, commercial, or strategic support to subsidiaries.

It does not prevent executives from holding several positions within a group.

It does confirm, however, that substance matters.

When the service agreement remunerates the corporate mandate itself, the risk of social security reassessment becomes real.

Abuse of Law: Why URSSAF Did Not Need the Special Procedure

One important procedural point concerns the abuse-of-law procedure under French Social Security Code Article L. 243-7-2.

The company argued that URSSAF had effectively set aside the management agreement and therefore should have used the abuse-of-law procedure.

The Cour de cassation rejected this argument.

The Court considered that the abuse-of-law procedure applies where the body collecting contributions sets aside an act because it is fictitious or because it was inspired by no other motive than avoiding social security contributions.

In the case, the courts did not find that the company had deliberately used the agreement for the sole purpose of avoiding contributions.

URSSAF had not necessarily relied on an abuse-of-law theory.

It had reclassified the sums based on their actual legal and economic nature.

This is a crucial distinction.

For companies, it means that URSSAF may not always need to prove an exclusively evasive intent in order to reassess management fees.

A reassessment can be based on the reality of the remunerated functions.

Why This Increases Practical Risk for Companies

The decision increases practical risk because it reduces the comfort companies may derive from formal documentation.

A company may have:

• a signed services agreement;
• invoices;
• accounting records;
• board approvals;
• and genuine intragroup relations.

That may still be insufficient if the services correspond to the normal duties of the corporate officer.

The risk is not only that the agreement is artificial.

The risk is that the agreement has the wrong object.

If the object is, in substance, executive leadership of the paying company, URSSAF may treat the amounts as executive compensation.

The Procedural Point: The Executive Does Not Always Need to Be Called Into the Case

The June 4, 2026 decision also addresses a procedural issue.

The company argued that the individual executive should have been called into the proceedings.

The Cour de cassation rejected that argument.

The Court clarified that when the court is asked to rule on the validity and merits of a social security reassessment, it does not necessarily decide on the individual’s affiliation status.

The dispute is primarily between the contributor and the collecting body.

Therefore, the court is not required to call the concerned individual or other social protection bodies into the case.

This point matters because it simplifies litigation over URSSAF reassessments.

It also confirms that a company may face a reassessment without the executive being automatically made a party to the proceedings.

Practical Examples

Example 1: Holding Company CEO Invoicing a Subsidiary

A holding company invoices a subsidiary €15,000 per month for “executive management services.”

The same person is president of the subsidiary and representative of the holding company.

If the services correspond to the day-to-day leadership of the subsidiary, URSSAF may argue that the amounts are executive compensation.

Example 2: Management Company Providing Broad Direction Services

A management company invoices several operating companies for general management, business development, and financial management.

The invoices are generic.

No specific deliverables are documented.

The same executive directs the operating companies.

The arrangement may be vulnerable if the services are indistinguishable from corporate officer functions.

Example 3: Founder Using a Consulting Company

A founder creates a consulting company that invoices the operating company for strategic management services.

If the founder is also the president of the operating company and performs executive functions through the consulting company, the fees may be challenged.

Example 4: Legitimate Shared Services Arrangement

A group company provides payroll, accounting, IT, compliance, procurement, or reporting services to subsidiaries.

The services are documented, priced, and distinct from corporate officer functions.

This type of arrangement may be more defensible, provided the evidence supports the reality and autonomy of the services.

Difference Between Tax Risk and Social Security Risk

Management fees are often analyzed from a tax perspective.

Companies ask whether the fees are:

• deductible;
• arm’s length;
• properly documented;
• supported by actual services;
• consistent with transfer pricing principles;
• not duplicative;
• and correctly invoiced.

The June 4, 2026 decision shows that tax analysis is not enough.

The same arrangement must also be assessed under social security law.

A fee may be deductible for tax purposes but still create URSSAF exposure if it remunerates executive functions.

The relevant question is therefore not only:

Did the company receive a service?

It is also:

Was the payment actually remuneration for a corporate officer’s mandate?

How Companies Should Secure Management Fees

1. Define Services Precisely

The agreement should clearly describe the services provided.

Avoid overly broad descriptions such as:

• general management;
• executive leadership;
• company direction;
• overall strategy;
• business steering.

These formulations may overlap with the role of the corporate officer.

Prefer precise descriptions linked to operational deliverables.

2. Distinguish Services From Corporate Mandate Functions

The contract should separate:

• corporate representation;
• legal management powers;
• strategic decision-making reserved to corporate officers;
• and external support services.

The service provider should not merely perform the role of the president through another entity.

3. Document Deliverables

Companies should preserve evidence of actual services.

Examples:

• reports;
• presentations;
• analyses;
• budgets;
• forecasts;
• operational plans;
• compliance reviews;
• financing memoranda;
• procurement documentation;
• customer development materials;
• minutes;
• dashboards.

Evidence is essential.

In URSSAF litigation, the burden often becomes practical: can the company show what was actually done?

4. Avoid Generic Invoices

Invoices should not merely state “management fees.”

They should refer to:

• the period;
• the nature of services;
• relevant deliverables;
• applicable contractual provisions;
• and where possible, supporting documentation.

5. Align Pricing With Services

The fee should be consistent with the value of the services actually rendered.

A flat fee may be defensible, but it should be supported by a pricing rationale.

6. Review Governance Documents

Board decisions, related-party agreement approvals, shareholder approvals, and group policies should be aligned.

Corporate approval does not eliminate URSSAF risk, but inconsistent governance increases vulnerability.

7. Check Executive Compensation Structure

Companies should verify whether the executive receives remuneration directly or indirectly.

If the management agreement is the economic substitute for executive compensation, the risk increases.

8. Conduct a Social Security Review

Management fee reviews should not be limited to tax and corporate law.

They should include URSSAF exposure.

Red Flags for CEOs, CFOs, and Legal Teams

A management fee arrangement should be reviewed carefully where:

• the same person manages both the service provider and the client company;
• the agreement covers general management, commercial management, or financial management;
• the paying company is a SAS;
• the executive is not otherwise remunerated by the paying company;
• invoices are generic;
• no deliverables exist;
• services are not measurable;
• the contract was drafted years ago and never updated;
• fees are calculated without a clear methodology;
• the arrangement is used across several companies without customization;
• the services overlap with legal duties of the president;
• the arrangement has only been reviewed from a tax perspective.

These indicators do not automatically mean the arrangement is unlawful.

They do mean that the arrangement deserves a legal, social security, and governance review.

Practical Checklist Before Implementing Management Fees

Before signing or renewing a management services agreement, companies should ask:

• Who performs the services?
• Does that person also hold a corporate office in the paying company?
• Are the services distinct from the corporate mandate?
• Are the services precisely described?
• Are the invoices detailed?
• Are deliverables documented?
• Is the fee consistent with the services provided?
• Is there a pricing methodology?
• Are the services actually performed by the service provider’s resources?
• Are the same services already expected from the company’s president?
• Has the arrangement been reviewed from a URSSAF perspective?
• Has the agreement been updated to reflect actual practice?
• Does the arrangement create a hidden executive compensation risk?

What CEOs Should Understand

For CEOs, the key point is simple:

A group structure does not make executive remuneration disappear.

If the executive function is performed for a company, and the economic flow remunerates that function, URSSAF may examine whether social security contributions are due.

This is especially important for founders and executives who operate through multiple entities.

Contractual structuring can optimize governance.

It cannot contradict economic reality.

What CFOs Should Understand

For CFOs, management fees create financial exposure beyond tax.

A reassessment may affect:

• payroll-related liabilities;
• social security contributions;
• penalties;
• cash-flow forecasts;
• provisions;
• due diligence;
• audit disclosures;
• and group cost allocation policies.

Management fees should therefore be monitored as part of financial risk management.

They are not merely an accounting line.

They may become a social liability.

What Legal Teams Should Understand

For legal teams, the decision reinforces the importance of contract substance.

A services agreement should not be treated as a template exercise.

The legal review must answer four questions:

• What is the service?
• Who performs it?
• Is it distinct from the corporate mandate?
• Can the company prove it?

This is where legal work creates measurable business value.

It prevents a contractual tool from becoming an URSSAF exposure years later.

Governance Lesson

The June 4, 2026 decision is not only about management fees.

It is about governance discipline.

Intragroup agreements are often signed because they appear convenient, tax-efficient, or operationally logical.

The legal risk emerges later, when the contract is compared with reality.

A well-governed group should periodically review:

• intragroup services agreements;
• executive mandates;
• compensation flows;
• related-party agreements;
• shared services policies;
• tax documentation;
• and social security exposure.

The goal is not to prohibit management fees.

The goal is to ensure that each fee corresponds to a real, distinct, documented service.

Practical Rule for Companies

The safest operational rule is this:
If a management fee pays for what the president or corporate officer is legally expected to do, it should be reviewed as potential executive compensation, not merely as an intragroup service fee.

This does not mean the arrangement is necessarily invalid.
It means the company must be able to prove that the service is autonomous, documented, and distinct from the mandate.

Strategic takeaways

The June 4, 2026 Cour de cassation decision confirms several important points for French corporate groups:

• Management fees are not secured by their contractual label.
• URSSAF can analyze the real function remunerated by the payment.
• The same individual managing both companies is a major risk indicator.
• Services overlapping with the president’s mandate may be reclassified as executive compensation.
• The abuse-of-law procedure is not always required.
• Social security risk must be reviewed alongside tax and corporate-law risk.
• Documentation of actual services is essential.

For CEOs and CFOs, the broader lesson is clear:

Conclusion

Management fees remain a useful tool for organizing corporate groups.

They can support shared services, centralize expertise, allocate costs, and create operational efficiency.

However, when a services agreement between related companies remunerates the same person’s executive functions in the paying company, the arrangement can create a significant URSSAF risk.

The French Cour de cassation’s June 4, 2026 decision makes the point unmistakable:

A management fee can become executive compensation when it pays for the corporate mandate in substance.

For business leaders, the priority is therefore not to eliminate management fees.

That means identifying the real services, separating them from corporate officer functions, documenting performance, aligning governance, and reviewing social security exposure before the URSSAF audit begins.

The priority is to secure them.

In modern corporate governance, legal review is not a cost center.

It is the mechanism that prevents a contractual shortcut from becoming a financial liability.