Company profits, What to do with them?

[muhaddib]

Hi All,
so, I got my company in a EU country, business is good and I am ok with local company taxes (they are high but I see them as my part for country development). Now the questions is for ideas for the after tax company profits , as after filling I will have a few hundred thousand available that would not be needed for company expansion.

What do you do with them? Do you pay your dividend tax and get money to your account, do you create another company for investing (real estate, market, etc), do you go outside the box?

While I'm ok with company profit tax I do find the dividend tax execive an would put total tax on profit above 50%. That would mean I would give gov €50 for every €100 my company makes.

Not looking for any ilegal scheme, all is legal and i do like to sleep well Just opinions from the ones that have been on the same situation.

Btw: I cannot relocalte due to family matters.

 

[JohnLocke]

I created a Holding company paramount under that a few investment firms and trading companies. So the profits are floating between the corporate structure. Every year I pay out dividend which get taxed at personal tax rate.

 

[muhaddib]

@Admin Problem is not the profits, maybe I did not explain well. The question is when you do have profits, and after they are taxed to the company (corporate tax) how do you use them whitouth pay them to yourself (and therefore dont pay dividend tax).

Just looking fo ideas.

 

[void]

@Admin Problem is not the profits, maybe I did not explain well. The question is when you do have profits, and after they are taxed to the company (corporate tax) how do you use them whitouth pay them to yourself (and therefore dont pay dividend tax).

Just looking fo ideas.

Give yourself a loan from the company with zero interest rate (in some countries there must be "usual" interest rate applied - crazy huh?). Repaid never or whenever you like.

or

Simply withdraw your cash from ATM or use a bank counter. In accounting of your company you can hold this cash money on a separate account (sorry, I'm not sure the proper accounting terminology in English) and if you are a sole owner no one will ever ask why or question it.

This is how it's usually done with reasonable amount of money - of course speaking about 5-6 figures the first option is preferred.

 

[KJK]

Just ask a local accountant (or better a tax advisor) - this has not much to do with taxes and they will be able to suggest many popular options. A company can buy and own assets. If you want to own something personally, dividend is probably better than keeping withdrawing cash through an ATM. However in many cases you don't really need to own things personally - company owned assets give you an additional layer of privacy in many situations.

 

[muhaddib]

Thank you @void and @KJK

Option to withdraw is not really an option as I can only do for a limited amount. Did not knew the loan option, will definively look into it.

What @KJK said was more into my thinking. Company can have assets, but for asset protection, I need to look into what type of company, in witch location and what the tax impact on my courrent company is. I like that idea, just dont want to have it all in the same company.

 

[TurnedToRobot]

The loan model is very used for companies where it is allowed i.e. Cyprus. In countries where it isn't allowed the model is used where the beneficial owner is not the lender or by using a middleman.