Legal entities such as a joint stock or limited company as well as a cooperative can pay out corporate profits to the owners. This appropriation of profits or distribution of profits is known as dividends.
This article is about dividends that your company distributes to the owners and not dividends on business assets (e.g. shares).
The appropriation of profits and thus dividend distributions are to be decided by the General Meeting (joint stock company or cooperative) or the Shareholders' Meeting (limited company).
When paying dividends, there are a few matters to consider:
- Future liquidity requirements of the company, e.g. for investments
- The formation of reserves: see OR 671 et seq. (Swiss Code of Obligations) among other things.
- Precautionary principle
- Ratio of salary and dividend
- Distribution practice / continuity
- Tax consequences of the distribution for the company and owners
- Withholding tax and notification to the FTA
We strongly recommend that you consult a trustee or tax expert for the appropriation of profits and dividend calculation. You will find our KLARA fiduciary partners here: www.klara.ch/partner.
The dividend is posted in KLARA with a manual posting. A simple example is given below:
|
Annual profit distributed in 2020 after allocation of reserves |
16,580.42 |
|
Distribution from profit carried forward from previous years |
3,419.58 |
|
Total dividends |
20,000.00 |
|
Minus 35% withholding tax |
7,000.00 |
|
Net dividend on current account holder |
13,000.00 |
