The partners of a company are likely to receive dividends. The question then arises of their taxation. How are dividends received by associated companies or shareholders taxed?
The taxation methods differ depending on whether the dividend is received by a natural person subject to income tax (IR) or by a legal person subject to corporation tax (IS). Focus on the taxation of dividends.
After paying corporation tax, a company may decide to set aside the remaining balance or distribute it to partners as dividends. Dividends therefore represent the profits made by the company and distributed to the partners in proportion to their participation in the capital or according to what is provided for in the articles of association.
The distribution of dividends can take place within a public limited company (SA), a simplified joint-stock company (SAS), a single-member simplified joint-stock company (SASU), a limited liability company (SARL) , a sole proprietorship with limited liability (EURL), a general partnership (SNC) subject to corporate tax or a civil society (SC) that has opted for corporation tax. You should know that in a SASU or an EURL, the decision to allocate profits is taken by a single decision of the partner (DAU).
Since 1 st January 2018, the dividend paid to a natural person is subject to a single lump sum levy (PFU) or "flat tax" of 30% composed of 12.8% for income tax and 17.2% for social levies. In 2019, the shareholder must report the amount of the gross dividend in the box "Tax credit equal to the non-discharging flat-rate deduction made in 2018 ". Individuals whose tax income for year N-2 is less than 50,000 euros for a single person or 75,000 euros for a married or PACS couple are exempt from the single flat-rate deduction.
Individuals who have an interest in it can opt for the progressive scale. In this case, the dividends will be subject to income tax in the category of income from movable capital (RCM). A 40% allowance on the amount of gross dividends received applies only if their payment has been decided at a general meeting and if the distributing company has its registered office in France or in the European Union.
Dividends received by legal persons are in principle subject to corporate tax, just like the other products of the company. The legal person partner holding at least 5% of the distributing company can benefit from an exemption of 95% of the amount of the dividends.
Thus, dividend drawdowns can be significant. It is advisable to take stock with an accountant before distributing them.
