When a company makes a profit, there are several options for allocating it:
Classic dividend
In any case, it is always worthwhile to distribute a dividend of €800, which is exempt.
When distributing this dividend, withholding tax on movable income will need to be paid (15% or 30% depending on whether or not the conditions for the VVPR-bis dividend are met).
However, this withholding tax on movable income declared and paid by the company on these €800 in dividends can be recovered through the PIT return of the person who received the dividend (codes 1437/2437).
If the dividend relating to the 2021 balance sheet is distributed in June 2022, for example, the withholding tax will be recovered in the PIT return for 2022 income (tax year 2023) --> one year later.
NB: please note that in order to distribute a dividend, the company must satisfy the liquidity and solvency tests
Carried-forward profit
It is possible to simply carry forward the profit. We generally choose this option for a new company in its first 2 financial years, but which will meet the conditions for VVPR-bis from the 3rd financial year onwards.
It also sometimes happens that we simply carry forward the result, if the liquidity and solvency tests do not allow dividends to be distributed.
The preferred solution for companies that are eligible and wish to withdraw money fairly quickly.
In general, from the 3rd financial year of the company (as soon as it is entitled to the 15% dividend), we propose that the client withdraw the full amount as a VVPR-bis dividend.
If they do not need money right away, the profit can simply be carried forward, and everything that has been carried forward can be withdrawn as a VVPR-bis dividend in subsequent years.
From the 3rd financial year of the company, the profit can be directly withdrawn as a dividend taxed at 15% (unlike the liquidation reserve, for which you must wait 5 years each time before withdrawing the profit for the year that was allocated to that reserve).
Unlike the liquidation reserve, it is possible to allocate not only the current year's profit to the VVPR-bis dividend, but also the carried-forward profit from previous financial years.
NB: please note that in order to distribute a dividend, the company must satisfy the liquidity and solvency tests
A solution generally used for companies that are not entitled to the VVPR-bis dividend. The liquidation reserve is then the best optimisation in this case.
It can even be more advantageous than the VVPR-bis dividend in cases where the person is close to retirement and intends to liquidate their company in the coming years (and does not need to withdraw money in the meantime). In this case, the taxation is only 10% on top of CIT (instead of 15%).
Disadvantages:
the 10% separate contribution must be paid immediately (whereas the dividend can only be withdrawn 5 years later)
you must wait 5 years each time between the moment of allocation to the liquidation reserve and the moment the dividend is withdrawn
Only the current year's profit can be allocated to the liquidation reserve (not the carried-forward profit from previous financial years), unlike the VVPR-bis dividend
please note that if the company creates a liquidation reserve and subsequently incurs losses and never has the opportunity to withdraw this liquidation reserve, it will have paid the 10% special contribution for nothing
NB: please note that when the company wishes to withdraw the liquidation reserve in 5 years' time, it will need to satisfy the liquidity and solvency tests
The director's fee is mainly used in cases where the director's remuneration during the financial year was not sufficient to benefit from the reduced CIT rate.
It is still possible to correct this at the time of profit allocation, given that the director's fee is treated as director's remuneration.
In general, a dividend is only allocated if not much additional remuneration is needed for the company to be entitled to the reduced rate (the social contributions and PIT paid on the director's fee are offset by the CIT saving).
NB: please note that in order to distribute a director's fee, the company must satisfy the liquidity and solvency tests
Legal reserve and other reserves
Since the legal reserve is no longer mandatory, we no longer use this allocation, which offers no particular benefit.
Summary table of the different ways to withdraw money from the company at the time of profit allocation:
