Company
Dividends
By the Finances Indépendants editorial teamUpdated on 3 min readAlso known as: Dividend, Dividendes
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Contents
What is a dividend?
A dividend is the share of profit a company decides to distribute to its shareholders. It is paid out of profit after corporate income tax, which means the amount distributed has already borne corporate income tax before being taxed a second time in the hands of the recipient.
The decision to distribute lies with the general meeting and requires the distribution rules of the Code of Companies and Associations to be respected, in particular the net asset and liquidity tests for an SRL/BV (private limited company).
Withholding tax on movable income
The standard rate is 30%. The withholding tax is final for an individual: once it has been withheld at source by the company, the dividend no longer has to be declared and is not subject to the progressive scale.
Three regimes reduce this rate: VVPRbis at 18% for SME shares issued after 1 July 2013, the liquidation reserve, and the partial dividend exemption in the tax return, which is capped and must be claimed yourself.
Dividend or remuneration: the trade-off
This is not a question of rates but of the chain of levies. Remuneration is deductible for the company, so it escapes corporate income tax, but it bears personal income tax at the marginal rate and NISSE (National Institute for the Social Security of the Self-employed, INASTI/RSVZ) contributions. A dividend is not deductible, so it bears corporate income tax, then withholding tax.
Remuneration keeps two structural advantages that the dividend lacks: it builds social security entitlements, pension included, and it is the basis for calculating the 80% rule, and therefore the ceiling of the IPC (individual pension commitment, EIP/IPT). A director who switches everything to dividends wipes out their capacity to build up a pension.
It is also a condition for the reduced corporate income tax rate, which requires a minimum remuneration. The trade-off is therefore assessed on four effects at once, never on a simple comparison of headline rates.
The liquidation reserve route
A 3-year waiting period and withholding tax of 9.8% on distribution, making a total burden of 18% including the 10% levy. This rate applies to dividends distributed or allocated from 11 June 2026 (Programme Act of 30 May 2026). A distribution before the 3 years are up is taxed at the standard rate of 30%.
It is the cheapest route for profit the company does not need to distribute immediately. In return, it means tying up the funds for 3 years: an early distribution is taxed at 30%.
Not to be confused with
The terms close to Dividends and what sets them apart.
- Dividends and the director's remuneration
- Remuneration is deductible for the company, builds social security entitlements and sets the IPC ceiling. A dividend does none of this, but bears a final levy at a fixed rate.
- Dividends and the director's percentage (tantième)
- A tantième is a remuneration for the directorship granted by the general meeting, deductible for the company and taxable as director's income. A dividend rewards capital, not the directorship.
Further reading
Dividends: frequently asked questions
30% as a general rule. It falls to 18% under the VVPRbis regime for SME shares issued after 1 July 2013, and to 9.8% via the liquidation reserve after 3 years.
It depends on four simultaneous effects: the reduced corporate income tax rate, which requires a minimum remuneration; social security entitlements; the IPC ceiling, calculated on remuneration; and the combined levies. Comparing headline rates alone leads to a poor decision.
Yes, for an individual: once withheld at source, the dividend no longer has to be declared and escapes the progressive scale. A capped partial exemption can, however, be claimed in the tax return.
Indirectly, yes. The IPC ceiling derives from the 80% rule applied to normal gross remuneration. A director who pays themselves in dividends rather than remuneration reduces their capacity to build up a pension accordingly.
No. An SRL/BV must pass the net asset test and the liquidity test before any distribution. A distribution that ignores them makes the directors liable and may have to be repaid.
You need to add corporate income tax, 25% or 20% depending on the regime, and then the withholding tax on the amount distributed. It is this combined figure that measures what the director actually receives.
Official source
- FPS Finance. View (new tab)(Official source, accessed on 2026-09-19)