Salary — deductible and accrues benefits
The salary you pay yourself is a deductible expense for the company, so it lowers the company’s taxable profit (corporate tax 20%). Salary is taxed as earned income on the progressive scale and accrues pension and social benefits. Employer side costs are also paid on salary.
Dividend — tax-efficient up to a limit
A dividend is paid from the company’s after-tax profit (the company has already paid 20% corporate tax). From an unlisted company, dividends are taxed lightly up to certain limits:
- Dividend up to 8% of the shares’ mathematical value: up to €150,000, 25% is taxable capital income and 75% is tax-free.
- For the part exceeding €150,000 (within the 8%): 85% is taxable capital income.
- Dividend exceeding 8%: 75% is taxable earned income.
- Capital-income tax is 30% up to €30,000 and 34% above that.
The figures are for 2026. The €150,000 limit is personal and covers all your unlisted-company dividends combined. The mathematical value is calculated from the company’s net assets.
What is the mathematical value?
A share’s mathematical value is the company’s net assets (assets minus liabilities) divided by the number of shares. The higher the net assets, the more lightly-taxed dividend you can take within the 8% rule.
Which is better — salary or dividend?
There is no single right answer. The most efficient approach depends on the company’s profit, its net assets, your other income and how much you value accruing pension and social benefits. Often the best solution is a combination.
A practical rule of thumb
- Pay salary at least at a sensible level so pension and benefits accrue.
- Use the lightly-taxed dividend within the 8% rule.
- Track net assets yearly — they set the favorable dividend amount.
- Plan your withdrawals in advance with your accountant.
Plan it with us
We calculate the optimal salary/dividend mix for your situation, legally — in your language. That way you pay exactly as much tax as needed, no more.
Frequently asked questions
- Is a dividend or salary more advantageous?
- It depends on the company’s profit and net assets and on your other income. A combination is often the most advantageous — we calculate it for you.
- What is the 8% dividend rule?
- From an unlisted company, a dividend up to 8% of the shares’ mathematical value is taxed lightly: up to €150,000, 25% is taxable capital income and 75% is tax-free.
- What is the €150,000 limit?
- It is a personal annual limit for the lightly-taxed dividend and covers all your unlisted-company dividends combined.
- Can I take only dividends?
- You can, but salary accrues pension and social benefits. That is why a combination of salary and dividend is often best.
Need help?
We help with setting up your business, taxes and bookkeeping — in five languages.