Every SIA owner eventually faces the same question: how do I pay myself while keeping taxes to a minimum? The answer depends on several variables — your income level, whether the company reinvests profits, and the new options available from 2026. In this article, we calculate both approaches step by step and show when each pays off.
How Both Options Work
Salary: PIT + Social Contributions
If you pay yourself a salary as a board member, the following is withheld from your gross salary:
Employee social contributions (VSAOI) — 10.50% of gross salary
Personal income tax (IIN) — 25.5% (on income up to €105,300 per year) or 33% (above this threshold), applying the non-taxable minimum of €550 per month
Additionally, the company as employer pays:
Employer VSAOI — 23.59% of gross salary
Business risk duty — 0.36% (bringing the total to 23.95%)
The total cost to the company for each euro the employee takes home significantly exceeds the net amount. For example, for the owner to receive €1,000 net salary, the company must spend approximately €1,594.
A key aspect: paying a salary reduces company profit because salary is an expense. In other words, this amount is not subject to CIT at all. However, the social contributions (VSAOI) on salary are substantial — the total rate reaches 34.09% of gross salary.[reference:9]
Dividends: CIT (and in Some Cases PIT)
Dividends represent a distribution of profits. In 2026, SIA owners have two choices:
Standard Regime (20/80 formula):
The company pays CIT using a gross-up mechanism: the amount to be distributed is divided by 0.8 and 20% is applied to the result. For example, to distribute €50,000 in dividends, CIT = (€50,000 / 0.8) × 20% = €12,500.[reference:10]
The individual (shareholder) pays no additional PIT — dividends are exempt from PIT because CIT has already been paid at company level.
Alternative Regime (15% + 6%) — new from 2026:
The company pays 15% CIT on distributed profit (dividing by a coefficient of 0.85).
The individual additionally pays 6% PIT on the dividends received.
For example, from €100,000 profit: CIT 15% = €15,000; dividends = €85,000; PIT 6% = €5,100; net = €79,900.[reference:11][reference:12]
The alternative regime is only available to companies whose all direct shareholders are individuals. It is particularly advantageous for: (1) owners who distribute most of their profits as dividends; (2) foreign investors who can use the 6% PIT as a tax credit in their home country.[reference:13]
Side-by-Side Calculations: Salary vs Dividends
To make the comparison concrete, let's assume the company has free cash flow available for owner compensation. We'll compare three levels.
Level 1: Approx. €1,000 per month (€12,000 per year)
Salary:
Gross salary: €1,290 per month (to achieve ~€1,000 net)
Employee VSAOI (10.50%): €135
Taxable income: €1,290 – €135 – €550 (non-taxable min.) = €605
PIT (25.5%): €154
Net salary: €1,001 per month
Employer VSAOI (23.59%): €304 per month
Total company cost: €1,594 per month or €19,128 per year
Owner's pocket per year: €12,012
Effective tax burden: 37.2%
Dividends (standard regime):
Assume the company earns €15,000 (enough to cover CIT and distribute ~€12,000)
CIT (20/80): €12,000 / 0.8 × 20% = €3,000
Required profit: €12,000 + €3,000 = €15,000
Owner's pocket per year: €12,000
Effective tax burden: 20%
Dividends (alternative regime):
CIT 15% on profit: €15,000 × 15% = €2,250
Dividends: €15,000 – €2,250 = €12,750
PIT 6%: €765
Owner's pocket per year: €11,985
Effective tax burden: 20.1%
Conclusion: At €1,000 per month, dividends are more advantageous — tax burden of 20% vs 37.2% for salary. The difference: nearly €3,300 per year in favour of dividends.
Level 2: Approx. €2,000 per month (€24,000 per year)
Salary:
Gross salary: ~€2,600 per month
Employee VSAOI (10.50%): €273
Taxable income: €2,600 – €273 – €550 = €1,777
PIT (25.5%): €453
Net salary: €1,874 per month (~€22,488 per year)
Employer VSAOI (23.59%): €613 per month
Total company cost: €3,213 per month or €38,556 per year
Owner's pocket per year: €22,488
Effective tax burden: 41.7%
Dividends (standard regime):
Required sum: €30,000 company profit
CIT (20/80): €24,000 / 0.8 × 20% = €6,000
Owner's pocket per year: €24,000
Effective tax burden: 20%
Dividends (alternative regime):
CIT 15%: €30,000 × 15% = €4,500
PIT 6%: (€30,000 – €4,500) × 6% = €1,530
Owner's pocket per year: €23,970
Effective tax burden: 20.1%
Conclusion: At €2,000 per month, dividends are significantly more advantageous — tax burden of 20% vs 41.7% for salary. The difference exceeds €8,000 per year.
Level 3: Approx. €5,000 per month (€60,000 per year)
Salary:
Gross salary: ~€6,400 per month
Employee VSAOI (10.50%): €672 (up to the cap)
Taxable income: €6,400 – €672 – €550 = €5,178
PIT (25.5% up to €8,775/month, 33% above): complex calculation — total PIT approximately €1,400 per month
Net salary: approximately €4,328 per month
Employer VSAOI: approximately €1,510 per month (up to the cap)
Total company cost: approximately €95,000 per year
Owner's pocket per year: €51,936
Effective tax burden: ~45%
Dividends (standard regime):
Required profit: €75,000
CIT (20/80): €60,000 / 0.8 × 20% = €15,000
Owner's pocket per year: €60,000
Effective tax burden: 20%
Dividends (alternative regime):
CIT 15%: €75,000 × 15% = €11,250
PIT 6%: (€75,000 – €11,250) × 6% = €3,825
Owner's pocket per year: €59,925
Effective tax burden: 20.1%
Conclusion: At €5,000 per month, dividends are clearly more advantageous — the difference between dividends and salary exceeds €8,000 per year.
Summary Table
Monthly net target | Salary: company annual cost | Salary: in pocket | Dividends: company profit needed | Dividends: in pocket | Difference |
|---|---|---|---|---|---|
€1,000 | €19,128 | €12,012 | €15,000 | €12,000 | ~€3,300 |
€2,000 | €38,556 | €22,488 | €30,000 | €24,000 | ~€8,000 |
€5,000 | ~€95,000 | €51,936 | €75,000 | €60,000 | ~€8,000+ |
The Hybrid Strategy: Small Salary + Dividends
In practice, most SIA owners use a hybrid approach: paying themselves the minimum salary (€780 per month in 2026) to secure social guarantees — pension, health insurance, sickness benefits — and distributing the rest as dividends.[reference:14]
Why the Hybrid Strategy Works
Social guarantees: A salary ensures VSAOI contributions, which provide entitlement to a pension, sickness benefits, and other social guarantees. Dividends do not provide such guarantees.
Tax optimisation: The minimum salary (€780) creates a relatively small tax burden — approximately €250 per month in company costs — but secures the minimum VSAOI contributions. Everything else is distributed as dividends with a 20% effective tax burden.
Flexibility: The salary can be changed monthly (with appropriate justification), while dividends can be distributed as needed — not monthly, but, for example, quarterly or annually.
Hybrid Example: €2,000 per month net
Minimum salary: €780 gross → approximately €660 net (after taxes)
Remainder via dividends: €1,340 per month × 12 = €16,080 per year
Company profit needed: €20,100 (to cover CIT)
CIT (standard): €16,080 / 0.8 × 20% = €4,020
Total in pocket per year: €7,920 (salary) + €16,080 (dividends) = €24,000
For comparison — a pure salary of €2,000 per month would cost the company €38,556 and leave €22,488 in the owner's pocket. The hybrid saves ~€8,000 at company level while maintaining the same net income.
The New Alternative Regime's Impact on the Hybrid Strategy
The alternative CIT regime (15% + 6%) changes the hybrid strategy calculation. Remember — under the alternative regime, 15% CIT is applied to all of the year's accounting profit regardless of distribution, not only to the distributed portion. Therefore:
If the company reinvests most of its profit (e.g. 70%+ stays in the company), the standard regime with a minimum salary and the remainder as dividends is more advantageous — CIT is paid only on the distributed portion.
If the company distributes most of its profit (75%+), the alternative regime becomes more advantageous, as the total tax burden of 20.1% is lower than the standard regime's 25% effective rate.
In a hybrid strategy with the alternative regime: pay the minimum salary, but from the remaining profit pay 15% CIT (regardless of distribution) and 6% PIT on the dividends actually distributed.
The Role of VSAOI Minimums in the Decision
An important aspect: if the SIA owner receives no salary at all (only dividends), there are no VSAOI contributions — and therefore no social guarantees. Although dividends are more tax-efficient, completely forgoing a salary means forgoing pension accumulation, health insurance, and sickness benefits.
In 2026, the minimum wage is €780 per month. To receive the minimum VSAOI contributions, this amount is sufficient. The minimum VSAOI contributions from a €780 salary provide:
Pension insurance
Disability insurance
Maternity and paternity insurance
Sickness insurance
Healthcare
That is why the hybrid strategy with a minimum salary is an almost universal recommendation — it combines the tax advantages of dividends with the social guarantees of a salary.
Additional Considerations
Solidarity Tax and the Additional 3% PIT
For higher incomes, two additional layers must be considered:
Solidarity tax (25%): applied to income exceeding the VSAOI cap — €105,300 per year (in 2026).[reference:15] This tax replaces the VSAOI portion above the cap.
Additional 3% PIT: applied to all income (including dividends) exceeding €200,000 per year.[reference:16][reference:17]
This means: at very high incomes (above €200,000 per year), the dividend advantage remains but narrows — because an additional 3% is added to both options. However, dividends still avoid VSAOI and the solidarity tax.
Board Member Remuneration Without an Employment Contract
If a board member receives remuneration without an employment contract (solely on the basis of board member authorisation), the employer's VSAOI portion is not payable. However, such remuneration does not entitle the individual to social guarantees. This option is rarely used and requires careful legal consultation.
When Each Approach Makes More Sense
Situation | Recommended approach |
|---|---|
Company newly incorporated, no profit | Salary only (or minimum salary) |
Company has profit, owner wants social guarantees | Hybrid: minimum salary + dividends |
Company has profit, social guarantees not important | Dividends only (standard or alternative regime) |
Most profit is reinvested | Standard CIT regime + small salary |
Almost all profit is distributed | Alternative regime (15%+6%) + minimum salary |
Owner is a foreign national | Alternative regime (6% PIT as tax credit) |
Frequently Asked Questions
Can I receive both salary and dividends at the same time?
Yes, this is completely legal and in fact the most common model among SIA owners. The salary provides social guarantees and reduces company profit (and therefore the CIT base). Dividends allow the remaining profit to be distributed with a lower tax burden.
How often can dividends be distributed?
Dividends may be distributed at any frequency — monthly, quarterly, or annually. Additionally, from 2026, it is possible to distribute extraordinary dividends (from current-year profits before the annual report is approved).
If I only take dividends, do I lose my pension rights?
Yes — if you receive no salary and therefore no VSAOI contributions are made, this period does not count towards your pensionable service and no pension capital is formed. That is why at least a minimum salary is recommended for the long term.
Is the alternative regime always more advantageous?
No. It is more advantageous if you distribute more than 75–80% of your profit. If most of the profit is reinvested, the standard regime is more advantageous, because CIT is paid only on the amount actually distributed.
The choice between salary and dividends is not a one-off decision — it is a strategy that should be reviewed each year depending on the company's profit, reinvestment plans, and personal financial goals. Our team helps SIA owners design an optimal remuneration structure, taking into account both tax efficiency and social protection.
Last updated: April 2026. Information is based on the Corporate Income Tax Law, the Personal Income Tax Law, and the State Social Insurance Law with 2026 amendments.
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