OY taxation

[Honest]

As far as I know you pay 30% flat tax rate on dividends you recieve (30% is exempt so practically you pay around 23%).

But does the company itself also pay any tax on profit before paying dividends?

e.g. A company of two people (OY) is left with a profit of 30 000 euros after payig all the salaries plus costs. One person owns 51% of the sahres and the other one 49%. How much tax company will pay from these 30 000 before distributing dividends? So what will those two people get effectively at the end after paying all the taxes?


A separate question; what happens if the company decides to pay 5000+5000 bonus to both partners some time near the end of the financial year?

[Rosamunda]

But does the company itself also pay any tax on profit before paying dividends?

Yes, 20% flat rate

e.g. A company of two people (OY) is left with a profit of 30 000 euros after payig all the salaries plus costs. One person owns 51% of the sahres and the other one 49%. How much tax company will pay from these 30 000 before distributing dividends?

30000 x 0.2 = 6000€

So what will those two people get effectively at the end after paying all the taxes?

It depends how much dividend the company pays out. Usually part (a major part) of the profits are ploughed back into the company as retained earnings (added to the equity on the balance sheet). It's not always the case that the Net Profit is actually available as cash to be paid out.

A separate question; what happens if the company decides to pay 5000+5000 bonus to both partners some time near the end of the financial year?

What happens? It's an expense for the company and income for the partners... It depends what you mean by bonus - do you mean it would be paid as a salary? The recipients will have to pay tax on it (and all the contributions eg pension etc) and the company will also have to pay employer contributions. It's not unusual for companies to spend at the end of the tax year just to reduce their profits but paying out a bonus to yourselves may not be the best way of financing a growing business.

And long term - you have to ask yourself if the company can take the cash flow hit. If your company is growing you will need cash to support the growth (and retained profits to boost your equity).

[Honest]

thanks. that clears up many questions.

Business is not growing and there is no possibility/intention to grow the business. Idea is to maximise income through legal means.

Company is composed of two workers who are also the share holders. As both hold more than 35% of shares so their pension and social contributions are different than a normal worker. So an increase in income (through salary) will sure increas the income tax rate but not necessarily pension contribution.