Neither all salary nor all dividends
The question an independent running a company settles once a year, usually by guesswork. The answer is at neither end: the curve has a peak, and it moves with the result.
A company shows a result before its president takes any remuneration. Someone has to decide what leaves as salary and what leaves as dividends. Both routes are taxed, but not by the same levies nor in the same order, and that is where the arbitrage comes from.
- Salary carries contributions twice (employer’s on the cost, employee’s on the gross) then the progressive income tax scale, after a capped 10 % deduction.
- A dividend goes first through corporate tax, at 15 % up to 42 500 € of profit then 25 %, and what survives that meets the flat tax.
- That flat tax is no longer 30 %. Social levies on investment income moved from 17.2 % to 18.6 %, which takes the flat rate to 31.4 %. The rise touches capital only: earned income keeps its rate.
Both ends lose, but nowhere near equally, and that is where intuition goes wrong. All salary is expensive: contributions pass twice, then the scale climbs. All dividends comes far closer: close enough that the rule of thumb “take it all as dividends” is defensible. What it leaves on the table is a modest salary, worth a few hundred to a few thousand euros depending on the result. That is not much, and it is measurable: hence the slider.
Set the company result, then sweep the salary level. The curve is the net in pocket; the dashed line marks the best point. Neither all-dividends nor all-salary wins, and the optimum moves with the result.
The model embedded here is reduced, and saying so beats letting it be guessed. Exact: the corporate tax thresholds and rates, the 31.4 % flat rate, the 2026 scale and the capped deduction. Approximated: contributions, flattened to two average rates where the real ones are bracketed, with a step at the social security ceiling. The shape of the curve is right and the peak lands in the right region: not on the right euro.
It also ignores what often decides the real arbitrage: the social rights attached to salary, the cash you want to leave in the company, reserves from earlier years already taxed, the option for the scale rather than the flat rate, and the household’s withholding rate. Those are parameters, not details. This is a scoping tool, not tax advice.