Taxation of dividends: calculation, regime and declaration

A company can pay dividends to its partners when it provides profits. What do they correspond to? How are they calculated? How are they imposed? Here are the rules to know about the taxation of dividends collected by employees according to their tax regime.

Capital video: Taxation of dividends: calculation, regime and declaration

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What is dividends?

Dividends: definition

Dividends designate an amount paid to shareholders or partners of a company according to the profit produced and the share held by the latter in the capital of the company.

Profits distributed to partners or shareholders

Schematically, when a company performs profits, shareholders or partners decide, often during the ordinary annual general meeting, either:

• To reinvest the benefit made in the company by putting it in reserve.
• To distribute it to partners in the form of dividends.

What types of businesses can pour dividends?

Several types of companies are affected by the payment of dividends. For example :

What is the dividend calculation formula?

The amount of dividends is proportional to the number of securities held

The amount of dividends collected by a partner is proportional to the number of securities he holds in the company in relation to the total number of securities making up the capital of the company.

Example of calculation for a capital of 10,000 euros

For example, a company has a capital of 10,000 euros divided into 10,000 shares. She achieves a profit of 100,000 euros. The partners decide to pay dividends up to 50,000 euros. The company is owned by a father up to 50 % (he has 5,000 shares) and his son who has the remaining 50 %. The dividend perceived by each of them is 50,000 euros x 50 % or 25,000 euros.

What are the dividend tax diets?

The taxation of dividends varies depending on whether the company is subject to income tax (IR) or corporate tax (IS).

Company relating to income tax

In a company relating to income tax, it is the partners who are personally imposed on the share of profits corresponding to their participation in capital. The dividends are not taxed separately: they are integrated directly into the overall benefit, distributed among the partners according to their shares.

Company corporate tax

On the other hand, for a company subject to corporate tax, taxation takes place in two stages. First, the benefits – from which dividends come – are taxed at the level of society. Then, the partners are imposed on income tax in proportion to their shares.

How is the dividends touching partner imposed?

Non -liberating lump sum sample

The dividends are imposed in the hands of the partners who perceive them. A non -liberating fixed levy (PFNL) of 12.8 % is applied to the amount of dividends to be paid. This sum is removed as a income tax deposit before the dividend to the partner.

Conditions to be exempt from the lump sum

The partner may request a lump sum exemption, under conditions:

• His tax reference income for the penultimate year compared to the payment of the deposit must be less than 50,000 euros if he is single;
• Its tax reference income of the penultimate year compared to the payment of the deposit must be less than 75,000 euros if it is married or PACS.

The request must be made before November 30 of the year preceding that of payment of dividends.

The dividends beneficiary then has the choice between two tax modes.

Single lump sum (pfu) called “flat tax”

Either the dividends are subject to the single flat -rate levy (PFU), known as “flat tax”, at the overall rate of 30 % including income tax up to 12.8 % and social security contributions for 17.2 %. If the lump sum has been applied, it covers the PFU.

Progressive income tax scale

Or, as an option of the partner, dividends are subject to the progressive scale of income tax and benefit from a tax reduction of 40 %. They are also subject to social security contributions at the rate of 17.2 %.

In companies subject to corporate tax, unlike those subject to income tax, dividends are already taxed at the level of society as profits.

How to declare your dividends to taxes?

Dividends must be declared on the partner’s declaration of income. In the event of an option for the gradual income tax scale, this option should be formalized by checking box 2op of the CERFA form n ° 2042.

How not to pay dividend tax?

There is no particular device to be exempt from dividends tax paid by a company. On the other hand, the holding of shares through life insurance makes it possible not to pay tax on dividends collected as long as no funds are taken.