As a company partner or shareholder, you'll often receive dividends from profits. Understanding their taxation is crucial. Here's how dividends are taxed when received by individuals or corporate entities.
Tax treatment varies based on the recipient: natural persons subject to income tax (IR) or legal entities under corporation tax (IS). We'll focus on dividend taxation rules.
After settling corporation tax, companies can retain profits or distribute them as dividends to partners, proportional to their capital stake or as per the bylaws.
Dividends can be distributed by entities like public limited companies (SA), simplified joint-stock companies (SAS or SASU), limited liability companies (SARL or EURL), general partnerships (SNC) under corporate tax, or civil societies (SC) opting for corporation tax. In a SASU or EURL, the sole partner decides via a single allocation decision (DAU).
Since January 1st, 2018, dividends paid to natural persons face a flat tax (PFU) of 30%—12.8% income tax and 17.2% social charges. For 2019, report gross dividends in the "Tax credit equal to the non-discharging flat-rate deduction made in 2018" box. Those with prior-year tax income below €50,000 (single) or €75,000 (married/PACS) may opt out of the flat tax.
Opting for the progressive income tax scale treats dividends as movable capital income (RCM), with a 40% abatement on gross amounts—if approved by general meeting and the company is headquartered in France or the EU.
Dividends received by corporations are generally subject to corporate tax. However, partners holding at least 5% of the distributing company qualify for a 95% exemption on the dividend amount.
Strategic dividend planning can optimize finances significantly. Always consult a qualified accountant for tailored advice.
