Tax revenues of the majority manager of limited liability companies

Tax revenues of the majority manager of limited liability companies

In limited liability companies, majority managers can be taxed on the basis of different tax revenues: remuneration, dividends and interest in the partner’s current account. Calculation of the tax revenues of the majority manager of SARLs with IS Most of the time, the social contributions of the majority manager are paid by the LLC. The

In limited liability companies, majority managers can be taxed on the basis of different tax revenues: remuneration, dividends and interest in the partner’s current account.

Calculation of the tax revenues of the majority manager of SARLs with IS

Most of the time, the social contributions of the majority manager are paid by the LLC. The tax income of the majority manager is obtained by deducting from his gross income for the year the deductible contributions paid during the year. These deductible contributions are all the contributions paid during the year, with the exception of those whose deduction is excluded by a legal provision (the CRDS, the non-deductible part of the CSG, the non-deductible part of the Madelinot contributions).

Reminder: the gross income of the majority manager is equal to the remuneration paid to him and to all the contributions paid by the SARL on his behalf. The increaseded charges recognized relating to the manager’s social security contributions are not to be taken into account.

If the majority manager receives dividends, they bear the single lump sum deduction according to the following terms:

  • On the share of dividends not subject to social contributions: normal application of the single flat-rate deduction of 30%.
  • On the share of dividends subject to social security contributions: application of the single flat-rate deduction at the rate of 12.80% only for the part of the deduction which concerns income tax. The part of the single flat-rate deduction relating to social security contributions (17.20%) is not applied to this portion of dividends given that they are already included in the social contributions payable, at the rate provided for income from ‘activity.
  • Optionally, the majority manager may opt for the taxation of his dividends at the progressive scale of income tax. Social security deductions and a non-discharging deposit of income tax (except in the case of exemption) are applied to dividends.

The tax return of the majority manager of SARL to the IS

The majority manager of an LLC must declare the tax income arising from his professional activity according to the following rules:

The tax income calculated on the basis of the remuneration must be reported on the income statement n ° 2042, in the category “Salaries and wages” as “Income from activity”. The use of the tax refund estimate  is also important.

The tax income calculated on the basis of the paid dividends must be reported on the declaration of income n ° 2042, in the category “Income from securities and movable capital” as “Income from shares and shares”. Any interest paid which has been calculated on contributions to a partner’s current account is to be declared in the category “Income from securities and movable capital” as “interest and other fixed income investment income”.

The company is also liable for the contribution for vocational training, calculated on the same basis by applying a flat rate equal to:

  • 0.1% for commercial activities,
  • 0.3% for craft activities,
  • 0.2% for service provision and liberal activities.
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