Today, it can be difficult to find one's way through the various solutions available to the company director, particularly when it comes to choosing the legal form for his or her company and, above all, the resulting consequences, notably in terms of remuneration, taxation, social protection and the different legal forms. The choice of remuneration can be a real headache.

The aim of our new article is to provide you with an overview of the different solutions available to managers.

To begin with, depending on the choice of legal structure, the status of the manager will be different, and we distinguish 2 categories:

Regardless of their status, managers are offered two remuneration options:

- in the form of wages or income,

- in the form of dividends.

Of course, a combination of these methods is possible and even desirable.

However, the social and tax consequences will be very different from one form of remuneration to the other.

TNS status:

If a company director with TNS status decides to opt for remuneration in the form of income, the latter will be subject to social security contributions at a rate of between 35% and 45%, depending on the amount of remuneration paid.

If, on the other hand, the same executive wishes to pay himself dividends, these will not be subject to social security contributions, but to social security deductions at the rate of 17.2%. This is a significant difference, particularly in terms of our executive's pension contributions.

« Assimilé salarié » status :

SAS directors can choose between remuneration in the form of wages, subject to social security contributions at a rate of between 50% and 75% depending on the amount, or remuneration in the form of dividends, under the same conditions as above.

Social aspects :

You'll have noticed that, depending on the type of remuneration chosen (income/salary or dividends), in one case we're talking about “social contributions”, while in the other we're talking about “social deductions”. This difference needs to be carefully considered. In fact, the social contributions deducted in the case of income/salaries enable contributions to be made to social protection schemes, unlike social levies which are only the CSG (Contribution Sociale Généralisée) and the CRDS (Contribution au Remboursement de la Dette Sociale), which are, in other words, just taxes.

You'll also notice that, depending on whether you're a self-employed or salaried employee, the amount of social security contributions due when you opt for an income-based remuneration system differs quite significantly. This difference is due to the difference in affiliation between the RGSS (Régime Général de la Sécurité Sociale) in the case of assimilated employee status, and the SSI (Sécurité Sociale des Indépendants) scheme for TNSs.

To simplify these concepts, it should be remembered that when the remuneration method is subject to social contributions, this grants better protection to the company director, since he or she contributes, among other things, to his or her pension and social protection.

Taxation:

Income and salaries are taxed according to the progressive income tax scale. The taxpayer can choose between two standard deductions: either a flat-rate deduction, or a deduction based on actual expenses.

Dividends may be taxed at the progressive income tax rate or at the flat rate of 30%, known as the Flat Tax, made up of the Prélèvement Forfaitaire Unique of 12.8% for income tax and the 17.2% social security levy (see above).

Note that if you opt for the progressive income tax scale, an allowance of 40% will be applied to determine the income tax base of your dividends (note that social security contributions are applied to the total amount of dividends paid).

ð For your information: there are now a number of ways to optimize taxation when income, whatever its category, is taxed on the progressive income tax scale. This is not possible when income is taxed according to the « Prélèvement Forfaitaire Unique ».

Every choice is essential when you decide to set up or expand your business. For the manager, there is no general truth concerning the ideal form of remuneration. A number of factors need to be taken into account: short-, medium- and long-term objectives, personal situation, etc. It is therefore essential to be supported in defining and implementing THE strategy that's right for YOU, and this work should be carried out in synergy with your chartered accountant.

Our team of wealth experts is at your disposal to help you make the right decisions. Contact us!

Finankap Group, always at your side to bring your dreams to life.