Taxation of dividends received by members
Verified 30 August 2024 - Directorate for Legal and Administrative Information (Prime Minister)
Dividends received by members are taxable against income tax (IR) or business tax (SI) depending on the tax regime of the member. The rules are different if the partner is a natural person or a legal person (business). The tax system of the business distributing dividends also has an impact. Dividends may be taxed either only at the level of the members or at both the level of the distributing business and at the level of the members.
Associate natural person
When a business subject to business tax makes profits, partners can decide by general meeting of to distribute part of these profits to the partners. Distributed profits are called dividends.
In a business subject to income taxHowever, there are no dividends per se. The profit of the business is not taxed at the level of the business but at the level of the shareholders for the share corresponding to the number of shares held. Dividends are included in profit imposed at the partner level. Thus, there is no distribution of profit in the form of dividends.
The taxation of dividends depends on the taxation system of the business distributing them:
- Business subject to income tax (IR) : the profit of the business is subject to income tax at the level of the partners. Each partner is taxed on the share of profits which corresponds to the percentage of shares he holds in the business. Dividends are included in profit.
- Business subject to business tax (IS) : dividends are taxed for the first time at the level of the business tax business as profits. Second, they are taxed at the level of shareholders for the share corresponding to the percentage of shares held.
Business subject to IR
When the business is subject to income tax, the profit is taxed at the level of the partners. Dividends are included in the share of profits which corresponds to the number of shares which the member holds in the business.
Taxation of profits depends on type of activity of the business:
- Commercial or craft activity : profits are taxed in the category of industrial and commercial profits (BIC)
- Liberal activity : profits are taxed in the category of non-commercial profits (BNC).
Business subject to SI
1. business level
The profits (including dividends) of the business are subject to business tax. Whether they are distributed or not, they are not deductible from the outcome of the business.
They shall be subject to one of the following arrangements:
- Business whose turnover excluding tax is less than €10 million and whose capital held at 75% by natural persons is fully repaid: application of the rate to15% up to €42,500 of profits. Beyond that, the rate increases to €25.
- Other businesses: application of the 25%.
For more information on business tax, please see our dossier on the subject.
2. At partner level
Dividends are subject to income tax at the level of the partner.
First, a flat-rate non-discharge levy (NTFP)of 12.8% shall be applied to the gross amount of the dividends. The amount shall be deducted by the institution responsible for paying the dividends to the member at the time the dividends are paid.
This levy constitutes a tax deposit on income. It is only at the time of the income tax return for the year in which the dividends are paid that they will be taxed.
Partner may request to be exempted from the non-discharge levy if it fulfills any of the following conditions:
- If alone: the reference tax income of the partner of the penultimate year compared to the payment of the deposit was less than €50,000
- If married or in transit: the partner's reference tax income the penultimate year compared to the payment of the deposit was less than €75,000.
He must apply to his financial institution for an exemption by 30 November of the previous year the payment of income. He must attach to his request for exemption an attestation on his honor in which he indicates that he meets the conditions of income.
It has the choice between 2 methods of taxation: the flat-rate levy (PFU) or the progressive scale of income tax :
Flat-rate flat-rate levy (PFU)
The flat-rate flat-rate levy (PFU) shall be equal to 30% : it is composed of a rate to 12.8% corresponding to income tax and a rate to 17.2% corresponding to social security contributions.
Since the NTFP is equal to the UTFP, the advance payment made by the payment institution at the time of the payment of the dividends to the member covers the amount of the taxation of the sums received by the member in the category of income from movable capital.
Progressive scale of the IR
The partner must opt for his dividends to be subject to the progressive income tax schedule.
To choose, it must check box 2OP of the cerfa form no. 2042 at tax time.
When dividends are taxed according to the progressive scale, a abatement of 40% is applied upstream. In other words 40% dividends are not subject to the progressive scale of income tax. This allowance does not apply to all income in the category of income from movable capital.
Warning
If he decides to opt for his dividends to be taxed at the progressive rate, the option applies to all amounts received in the category of income from movable capital and capital gains from the sale of securities (interest on current accounts of shareholders, etc.).
Once the option is taken, the dividends are included in the progressive scale of incomeof the partner. If he has other income taxable at the progressive income tax rate, all his income is added up to be taxed together at the progressive rate.
A reduction of 10% shall be applied to such income before taxation to take account of professional expenses currents of the partner. Examples are travel expenses between home and work, catering expenses in the workplace.
FYI
The partner may opt to have instead of the rebate 10%, its professional expenses are deducted from their actual amount. He must, however, keep all the evidence of his professional expenses.
Depending on the amount of revenue, the tax administration applies the following progressive scale:
Income brackets | Income tax bracket rate |
|---|---|
Up to €11,294 | 0% |
From €11,295 to €28,797 | 11% |
From €28,798 to €82,341 | 30% |
From €82,342 to €177,106 | 41% |
More than €177,106 | 45% |
Once each of the rates is applied to the different income brackets of the partner, a single rate is determined and applied each month. Taxes are then levied at source by the tax administration.
For more information on withholding tax, see the dedicated card.
Warning
The NTFP is not necessarily equal to the amount of the partner's progressive scale of capital gains tax. If the deposit paid is greater than the amount of tax, the excess is refunded to the partner.
A member who receives dividends must report the amounts received at the time of the member's income tax return for the year in which the dividends were received. Under the business tax regime, dividends are not reported in the same way.
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Business subject to income tax (IR)
The business and the partners do not declare dividends but the realized profit.
The business must report its profits and the members must report their share of profits. The reporting varies according to the type of benefit: BIC: titleContent or NBC: titleContent.
Industrial and Commercial Profits (BIC)
The reporting of profits varies according to the tax regime applied to the business: simplified real regime or standard real regime.
Simplified real regime
The annual turnover excluding tax (CAHT) of the business is between €188,700 and €840,000.
The business must report its findings with the form No. 2031 and the book of Annex Tables 2033-A to 2033-G.
This declaration must be made to the later than 15 days after 2e working day after 1er May.
It must send its declaration of results either by EDI-TDFC procedure, or on the online business tax account (EFI mode).
The partner must report its share of the business' profits for the year 2023 at the time of its 2023 annual income tax returndone in May/June 2024.
The amount must be indicated on the cerfa form no 2042-C-PRO under ‘professional industrial and commercial income’.
He must file his return online on Impasse.gouv.fr via his special space :
Taxes: access your Special Space
The period during which the partner must report his taxes varies according to the department in which he lives. We provide a simulator to know this date directly by informing his department of residence:
Normal Actual Speed
The business' annual sales net of tax (CAHT) is greater than €840,000.
The business must report its findings with the form No. 2031 and the bundle of Annex Tables Nos 2050, 2051, 2052, 2053, 2059-F and 2059-G. This declaration must be made to the later than 15 days after 2e working day after 1er May.
It must send its declaration of results by EDI-TDFC procedure.
The partner must report its share of the business' profits for the year 2023 at the time of its 2023 annual income tax returndone in May/June 2024.
The amount must be indicated on the cerfa form no 2042-C-PRO under ‘professional industrial and commercial income’.
He must file his return online on Impasse.gouv.fr via his special space :
Taxes: access your Special Space
The period during which the partner must report his taxes varies according to the department in which he lives. We provide a simulator to know this date directly by informing his department of residence:
Non-Commercial Profits (NTB)
The business must report its findings with the form Statement of results for NCBs No 2035 and Annexes No 2035 A and No 2035 B.
She has to do it at the most late 15 days later on 2e working day after 1er May by the EDI-TDFC procedure or on the online business tax account (EFI mode) .
The business must also contact the Form No. 2035-AS-SD the list of persons holding at least 10% of its capital. The following information should be specified:
- Each natural person: number of shares held, holding rate, surname, first names, address, date and place of birth
- Each business: number of shares or shares held, holding ratio, name, address and SIRET
It must also provide a list of its subsidiaries and their holdings, specifying for each of them the holding rate and its Siret number.
The partner must report its share of the business' profits for the year 2023 at the time of its 2023 annual income tax returndone in May/June 2024.
The amount must be indicated on the cerfa form no 2042-C-PRO under ‘professional non-commercial income’.
He must file his return online on Impasse.gouv.fr via his special space :
Taxes: access your Special Space
The period during which the partner must report his taxes varies according to the department in which he lives. We provide a simulator to know this date directly by informing his department of residence:
Business subject to business tax (IS)
Dividend reporting varies depending on how they are taxed: flat-rate flat-rate levy (FLP) or progressive income tax scale (IR):
Flat-rate flat-rate levy (PFU)
The business or financial institution paying the dividends must inform the tax authorities.
In the 15 days after the month when the dividends were paid, you must file your return online using the form 2777-SD :
- Through a representative using the EDI teleprocedure
- On the business account of impots.gouv
Online tax account for professionals (EFI mode)
The partner must report the remuneration he receives for his mandate for the year 2023 at the time of his appointment. 2023 annual income tax returndone in May/June 2024.
The amount of this remuneration must be indicated on the line ‘Other distributed and assimilated income’ (2TS) of the game ‘Income from movable capital’ of the cerfa form no. 2042
He must file his return online on Impasse.gouv.fr via his special space :
Taxes: access your Special Space
FYI
The amount of the deposit paid by the business is pre-filled on the line ‘Flat-rate levy not in discharge of obligations already paid’ (2CK) of the party ‘Income from movable capital’ of the cerfa form no. 2042.
The period during which the partner must report his taxes varies according to the department in which he lives. We provide a simulator to know this date directly by informing his department of residence:
Tax scale in income
The business or financial institution paying the dividends must inform the tax authorities.
In the 15 days after the month when the dividends were paid, you must file your return online using the form 2777-SD :
- Through a representative using the EDI teleprocedure
- On the business account of impots.gouv
Online tax account for professionals (EFI mode)
The partner must also declare the dividends it receives in 2023 at the time of its 2023 annual income tax returndone in May/June 2024.
The amount of the dividends must be indicated on the line ‘Other distributed and assimilated income’ (2TS) of the game ‘Income from movable capital’ of the cerfa form no. 2042
He must file his return online on Impasse.gouv.fr via his special space :
Taxes: access your Special Space
FYI
The amount of the deposit paid by the business or payment institution is pre-filled on the line ‘Flat-rate levy not in discharge of obligations already paid’ (2CK) of the party ‘Income from movable capital’ of the cerfa form no. 2042.
The period during which the partner must report his taxes varies according to the department in which he lives. We provide a simulator to know this date directly by informing his department of residence:
Partner legal person (business)
Where a business subject to business tax makes a profit, the members may decide to general meeting of to distribute part of these profits to the partners. Distributed profits are called dividends.
In a business that is subject to income tax, there is no dividend per se. Indeed, the profit of the business is not taxed at the level of the business but at partner level for the share corresponding to the number of shares held. Dividends are included in profit imposed at the partner level. Thus, there is no distribution of profit in the form of dividends.
The taxation of dividends depends on the taxation system of the business distributing them:
- Business subject to income tax (IR) : the profit of the business is subject to income tax at the level of the partners. Each partner is taxed on the share of profits which corresponds to the percentage of shares he holds in the business. Dividends are included in profit.
- Business subject to business tax (IS) : dividends are taxed for the first time at the level of the business tax business as profits. Business They are then taxed at the level of the members for the share corresponding to the percentage of shares held.
The associated business receiving dividends may benefit from an exemption from 95% the amount of the dividends. In other words, alone 5% dividends are subject to tax.
In order to benefit from this exemption, the associated business must fulfill one of the following conditions:
- Hold at least 5% of the capital of the business distributing the dividends during at least 2 years
- Be controlled by one or more non-profit organizations and hold at least 2.5% capital of which 5% voting rights in the business during at least 5 years.
For more information, see the dedicated Bofip page.
Business subject to income tax (IR)
Where the business is subject to income tax, the profit shall be taxed on the partner level.
They are taxed according to the taxation regime of the associated business:
- If the associated business is subject to income tax (IR), dividends are included in the profit of the associated business and taxed at the level of the partners.
- If the associated business is subject to business tax (IS), the dividends are included in the profit of the associated business and subject to business tax.
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Associated business subject to IR
Where the distributing business is subject to income tax, the profit is taxed at the level of the members. Dividends are included in the share of profits which corresponds to the percentage of shares which the member holds in the business.
Taxation of profits depends on type of activity associated business:
- Commercial or craft activity : profits are taxed in the category of industrial and commercial profits (BIC)
- Liberal activity : profits are taxed in the category of non-commercial profits (BNC).
Associated business Submitted to SI
Dividends received by the associated business are integrated into its profits and they are taxed on businesses.
They shall be subject to one of the following arrangements:
- Business whose turnover excluding tax is less than €10 million and whose capital held at 75% by natural persons is fully repaid: application of the rate to15% up to €42,500 of profits. Beyond that, the rate increases to €25.
- Other business: application of the 25%.
Business subject to SI
1. business level
The profits (including dividends) of the business are subject to business tax. Whether they are distributed or not, they are not deductible from the outcome of the business.
They shall be subject to one of the following arrangements:
- Business whose turnover excluding tax is less than €10 million and whose capital held at 75% by natural persons is fully repaid: application of the rate to15% up to €42,500 of profits. Beyond that, the rate increases to €25.
- Other business: application of the 25%.
For more information on business tax, please see our dossier on the subject.
2. At partner level
They are also taxed at partner level.
Where the member is a business, they shall be taxed according to the taxation regime of the associated business:
- If the business is subject to income tax (IR), dividends are included in the business and taxed at the level of the members.
- If the business is subject to business tax (IS), dividends are included in the business and subject to business tax.
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Associated business subject to IR
When the business is subject to income tax, the profit is taxed at the level of the partners. Dividends are included in the share of profits which corresponds to the percentage of shares which the member holds in the business.
Taxation of profits depends on type of activity of the business:
- Commercial or craft activity : profits are taxed in the category of industrial and commercial profits (BIC)
- Liberal activity : profits are taxed in the category of non-commercial profits (BNC).
Associated business Submitted to SI
Dividends received by the associated business are included in its profits and are taxed on businesses.
They shall be subject to one of the following arrangements:
- Business whose turnover excluding tax is less than €10 million and whose capital held at 75% by natural persons is fully repaid: application of the rate to15% up to €42,500 of profits. Beyond that, the rate increases to €25.
- Other business: application of the 25%.
A member who receives dividends must report the amounts received at the time of the member's income tax return for the year in which the dividends were received. Dividend reporting rules vary depending on the taxation regime of the business distributing the dividends.
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Business subject to income tax (IR)
The business and partners do not declare dividends but the realized profit. The business must report its profits and the members must report their share of profits. The applicable rules depend on the tax regime of the business:
Associated business subject to IR
The dividends of the business are included in the profit of the associated business, which is taxed at the level of its partners.
The associated business only has to file its income statement in which it declares its profits (including dividends received). The income statement shall vary according to the profits which the associated business makes: BIC: titleContent or NBC: titleContent.
Industrial and Commercial Profits (BIC)
The reporting of profits varies according to the tax regime applied to it: simplified real regime or normal real regime.
The annual turnover excluding tax (CAHT) of the business is between €188,700 and €840,000.
The business must report its findings with the form No. 2031 and the book of Annex Tables 2033-A to 2033-G.
This declaration must be made to the later than 15 days after 2e working day after 1er May.
It must send its declaration of results either by EDI-TDFC procedure, or on the online business tax account (EFI mode).
The business' annual sales net of tax (CAHT) is greater than €840,000.
The business must report its findings with the form No. 2031 and the bundle of Annex Tables Nos 2050, 2051, 2052, 2053, 2059-F and 2059-G. This declaration must be made to the later than 15 days after 2e working day after 1er May.
It must send its declaration of results by EDI-TDFC procedure.
Non-Commercial Profits (NTB)
The business must report its findings with the form Statement of results for NCBs No 2035 and Annexes No 2035 A and No 2035 B.
She has to do it at the most late 15 days later on 2e working day after 1er May by the EDI-TDFC procedure or on the online business tax account (EFI mode) .
The business must also contact the Form No. 2035-AS-SD the list of persons holding at least 10% of its capital. The following information should be specified:
- Each natural person: number of shares held, holding rate, surname, first names, address, date and place of birth
- Each business: number of shares or shares held, holding ratio, name, address and SIRET
It must also provide a list of its subsidiaries and their holdings, specifying for each of them the holding rate and its Siret number.
Associated business subject to SI
The dividends of the business are integrated into the benefit of the associated business. It reports its profits at the time of its income statement.
The deadline for submitting the income statement depends on the closing date of the accounting year. Some companies close their accounting year on 31 December, while others close on another date. Specific rules exist when the business is new or when it ceases to operate.
Closing date: 31 December N-1
The rules for declaring profit or loss vary according to the business taxation system: simplified real scheme or ordinary real scheme.
The business achieves one of the following HT sales:
- For trading and housing supply activities: between €188,700 and €840,000
- For service activities and furnished rentals: between €77,700 and €254,000
The business must file the form no. 2065-SD and the tax book No. 2033-A-SD to 2033-G-SD) no later than 2e working day after 1er May. ;
The reporting of results shall be carried out by dematerialized channel in one of the following ways:
- Fashion EDI-TDFC, through an EDI partner
- EFI mode, that is, directly from the subscriber space on the website impots.gouv.fr
The business achieves one of the following duty-free sales:
- For trading and housing supply activities: turnover above €840,000
- For service activities and furnished rentals: turnover above €254,000
The business must file the form no. 2065-SD and the tax package No 2050 to 2059 G no later than 2e working day after 1er May.
The reporting of results shall be carried out by dematerialized channel in EDI-TDFC mode through an EDI partner.
FYI
The tax administration shall grant an additional period of 15 days in the case of teletransmission.
Closes on a date other than December 31
The business achieves one of the following HT sales:
- For trading and housing supply activities: between €188,700 and €840,000
- For service activities and furnished rentals: between €77,700 and €254,000
The business must file the form no. 2065-SD and the tax book No. 2033-A-SD to 2033-G-SD) not later than 3 months after the end of the financial year
The reporting of results shall be carried out by dematerialized channel in one of the following ways:
- Fashion EDI-TDFC, through an EDI partner
- EFI mode, that is, directly from the subscriber space on the website impots.gouv.fr
The business achieves one of the following duty-free sales:
- For trading and housing supply activities: turnover above €840,000
- For service activities and furnished rentals: turnover above €254,000
The business must file the form no. 2065-SD and the tax package No 2050 to 2059 G within three months of the end of the financial year.
The reporting of results shall be carried out by dematerialized channel in EDI-TDFC mode through an EDI partner.
FYI
The tax administration shall grant an additional period of 15 days in the case of teletransmission.
Business subject to business tax (IS)
The method of reporting dividends differs depending on the tax regime of the associated business.
The business that distributes the dividends must declare its performance. For more information on reporting a business to the SI, see the dedicated card.
Associated business subject to IR
The dividends of the business are included in the profit of the associated business, which is taxed at the level of its partners.
The associated business only has to file its income statement in which it declares its profits (including dividends received). The income statement shall vary according to the profits which the associated business makes: BIC: titleContent or NBC: titleContent.
Industrial and Commercial Profits (BIC)
The reporting of profits varies according to the tax regime applied to it: simplified real regime2 or normal real regime:
The annual turnover excluding tax (CAHT) of the business is between €188,700 and €840,000.
The business must report its findings with the form No. 2031 and the book of Annex Tables 2033-A to 2033-G.
This declaration must be made to the later than 15 days after 2e working day after 1er May.
It must send its declaration of results either by EDI-TDFC procedure, or on the online business tax account (EFI mode).
The business' annual sales net of tax (CAHT) is greater than €840,000.
The business must report its findings with the form No. 2031 and the bundle of Annex Tables Nos 2050, 2051, 2052, 2053, 2059-F and 2059-G. This declaration must be made to the later than 15 days after 2e working day after 1er May.
It must send its declaration of results by EDI-TDFC procedure.
Non-Commercial Profits (NTB)
The business must report its findings with the form Statement of results for NCBs No 2035 and Annexes No 2035 A and No 2035 B.
She has to do it at the most late 15 days later on 2e working day after 1er May by the EDI-TDFC procedure or on the online business tax account (EFI mode) .
The business must also contact the Form No. 2035-AS-SD the list of persons holding at least 10% of its capital. The following information should be specified:
- Each natural person: number of shares held, holding rate, surname, first names, address, date and place of birth
- Each business: number of shares or shares held, holding ratio, company name, address and Siret
It must also provide a list of its subsidiaries and their holdings, specifying for each of them the holding rate and its Siret number.
Associated business subject to SI
The dividends of the business are integrated into the benefit of the associated business. It reports its profits at the time of its income statement.
The deadline for submitting the income statement depends on the closing date of the accounting year. Some companies close their accounting year on 31 December, while others close on another date. Specific rules exist when the business is new or when it ceases to operate.
Closing date: 31 December N-1
The rules for declaring profit or loss vary according to the business taxation system: simplified real scheme or ordinary real scheme.
The business achieves one of the following HT sales:
- For trading and housing supply activities: between €188,700 and €840,000
- For service activities and furnished rentals: between €77,700 and €254,000
The business must file the form no. 2065-SD and the tax book No. 2033-A-SD to 2033-G-SD) no later than 2e working day after 1er May.
The reporting of results shall be carried out by dematerialized channel in one of the following ways:
- Fashion EDI-TDFC, through an EDI partner
- EFI mode, that is, directly from the subscriber space on the website impots.gouv.fr
The business achieves one of the following duty-free sales:
- For trading and housing supply activities: greater than €840,000
- For service activities and furnished rentals: greater than €254,000
The business must file the form no. 2065-SD and the tax package No 2050 to 2059 G no later than 2e working day after 1er May.
The reporting of results shall be carried out by dematerialized channel in EDI-TDFC mode through an EDI partner.
FYI
The tax administration shall grant an additional period of 15 days in the case of teletransmission.
Closes on a date other than December 31
The business achieves one of the following HT sales:
- For trading and housing supply activities: between €188,700 and €840,000
- For service activities and furnished rentals: between €77,700 and €254,000
The business must file the form no. 2065-SD and the tax book No. 2033-A-SD to 2033-G-SD) not later than 3 months after the end of the financial year
The reporting of results shall be carried out by dematerialized channel in one of the following ways:
- Fashion EDI-TDFC, through an EDI partner
- EFI mode, that is, directly from the subscriber space on the website impots.gouv.fr
The business achieves one of the following duty-free sales:
- For trading and housing supply activities: greater than €840,000
- For service activities and furnished rentals: greater than €254,000
The business must file the form no. 2065-SD and the tax package No 2050 to 2059 G within three months of the end of the financial year.
The reporting of results shall be carried out by dematerialized channel in EDI-TDFC mode through an EDI partner.
FYI
The tax administration shall grant an additional period of 15 days in the case of teletransmission.
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