Company & executive compensation
How does the remuneration of a company executive work?
The company and its director constitute two separate legal and tax entities. The money generated by the company belongs exclusively to the legal entity.
To generate income, the company allocates remuneration to its director as decided by the competent body (according to the company's legal structure and articles of association). This remuneration is a business expense for the company and reduces its taxable profit.
What is the difference between salary, dividend and benefit in kind (BIK)?
There are three main ways to extract income or benefits from your company:
Remuneration (manager's salary): This is the income paid for carrying out your duties. It constitutes a deductible expense for the company, but it is subject to self-employed social security contributions and Personal Income Tax (PIT) for the manager.
The dividend: This is the distribution to shareholders of a portion of the net profit remaining in the company after the payment of corporate income tax. The dividend is not subject to self-employed social security contributions, but is subject to a withholding tax called Précompte Mobilier (standard rate of 30%, which can be reduced under optimized schemes such as the VVPRbis or the liquidation reserve).
Benefits in kind (BIK): This is when the company covers a personal expense (car, smartphone, housing, electricity). This benefit is valued and included in your payslip to be taxed for personal income tax and social security contributions as salary.
How are the incomes of a company and its manager taxed?
The money generated by the activity is not taxed twice on the same amount: it is either corporate income tax in the company, or personal income tax for the manager.
The calculation of the company's taxable profit (subject to corporate income tax) is schematically established as follows:
Taxable profit = Sales (Revenue) – Purchases – Your Executive Compensation
Since your remuneration is a deductible business expense, it creates a ripple effect:
If you increase your salary:
You directly reduce the company's profit, which lowers the Corporate Income Tax (CIT) . However, this salary increase raises your social security contributions and your Personal Income Tax (PIT) .
If you reduce your salary:
You pay less social security contributions and less personal income tax. However, the profit remaining in the company increases, which in turn increases Corporation Tax (CIT) .
Applicable tax rates:
Corporate side (ISoc): The remaining profit is taxed at the ordinary rate of 25% (or at the reduced SME rate of 20% on the portion from 0 to €100,000, subject to compliance with the conditions).
From the Manager's Perspective (Personal Income Tax): Remuneration and benefits in kind (after deduction of social security contributions) are subject to the progressive PIT tax scale (from 25% to 50%). Each taxpayer benefits from a tax-exempt portion (untaxed basic income bracket, increased according to family circumstances), with tax only applied to the portion exceeding this threshold.
What is the difference in taxation between a sole proprietorship and a corporation?
The method of taxation depends directly on the legal structure chosen for your business:
As a sole proprietor (natural person): There is no legal or tax distinction between you and your business. Profit is equal to your remuneration.
The calculation is: Profit = Remuneration = Sales (Turnover) – Purchases . This entire amount is fully subject to Personal Income Tax (PIT) at the progressive rate (from 25% to 50%), and to social security contributions, whether you withdraw the money from the bank account or leave it there.
In a company (SRL, etc.): The company and the manager are two separate entities. The money generated belongs to the company. Taxation is separate: the company pays Corporate Income Tax (CIT) on its remaining profit, and the manager pays Personal Income Tax (PIT) only on the remuneration allocated to them.
Can I use my company card for personal expenses?
In principle, no . The company's means of payment must be used exclusively for expenses incurred within the scope of professional activity.
If a strictly private expense is covered by the company:
It does not constitute a deductible business expense for the company.
It is recorded as a receivable from the manager via the manager's current account , meaning that you incur a debt to the company.
What is a manager's current account and what are the risks if it is negative (overdrawn)?
The current account records temporary financial flows between the manager and their company:
Credit balance in your current account (the company owes you money): You have lent personal funds to the company or left uncollected salary payments. The company can reimburse you for these actual and documented sums without taxation, or pay you loan interest (subject to withholding tax and within the limits of legal deductibility limits).
Overdrawn current account (you owe money to the company): You have withdrawn more funds than the remuneration or dividends actually allocated.
Tax implications: The provision of funds without interest or at a preferential rate may result in the taxation of a benefit in kind (benefit in kind on a debit current account) , calculated according to the applicable tax rules and scales.
Legal implications: In the event of the company's bankruptcy, the outstanding balance constitutes a debt that the trustee can claim from the manager.
How can I benefit from the VVPRbis regime or the liquidation reserve to reduce the taxation of my dividends?
Optimization schemes allow for reducing the withholding tax on movable property below the standard rate of 30%:
The VVPRbis regime:
Applicable under strict conditions to SMEs (created or capitalized since July 1, 2013 through cash contributions resulting in new shares):
For dividends from the first accounting period: withholding tax at the ordinary rate of 30% .
For dividends from the following accounting periods (after compliance with the legal waiting period): reduced withholding tax at the preferential rate of 18% .
The liquidation reserve (Article 184 quater CIR 92):
An SME can allocate all or part of its net profit (after corporate income tax) to a liquidation reserve account, subject to an immediate separate contribution of 10% to corporate income tax.
For reserves established from December 31, 2025, a distribution after at least three years is subject to a withholding tax of 9.8% (old reserves remain subject to the transitional rules applicable to them).
In the event of complete liquidation of the company, no additional withholding tax is due in principle ( 0% ), subject to the applicable anti-abuse rules.
What is the share register (shareholders' register) and why is it legally required for an SRL?
The shareholders' register is the mandatory legal document recording the identity of the shareholders, the number of shares held, their category and the history of share movements.
Evidentiary value: It allows for the official identification of shareholders and the establishment of rights attached to securities (voting rights, dividend rights).
Legal obligation: It must be kept at the company's registered office in paper or electronic format in accordance with the legally required provisions of the Companies and Associations Code (CSA).
Controls: In particular, it allows the identification of shareholders entitled to distributions (e.g., for the application of the VVPRbis regime) and constitutes an important document during securities transactions or controls.
UBO Register: what is it, who needs to be declared in it, and why is it mandatory to update your data within one month in case of changes?
The UBO ( Ultimate Beneficial Owners ) register is an official register aimed at identifying the beneficial owners of companies.
Who needs to be declared?
Natural persons who own (directly or indirectly) more than 25% of the shares or voting rights, those who exercise effective control by other means, or, failing identification, the principal managers.
Updated within 30 days and confirmed annually:
Amendment: Any change to the data relating to beneficial owners must be recorded in the UBO register within one month (30 days).
Confirmation: Annual confirmation of data accuracy is mandatory, even in the absence of changes.
Sanctions: Failure to comply with UBO obligations exposes company directors to administrative fines (ranging from €250 to €50,000).
