Paying yourself from your company

Start with "Should you pay yourself a salary, dividends or both?". It helps you choose a pay mix, and the other pages build on that choice.

Then read the page that matches your next step:

• "Paying yourself as administrator: why the statutes decide" if you will be an administrator and want that pay to be valid and deductible.
• "Which Social Security regime applies when you work in your own company?" to compare the autónomo societario route with employee-style cover.
• "How to pay dividends legally" before you pay anything out, so accounts and reserves are in order first.
• "Lending to or borrowing from your own company" if money will move between you and the company.

Personal income tax on your pay, the amounts of the autónomo quota and autónomo registration are covered in other Topics.

Key rules

• Administrator pay: The administrator role is unpaid unless the statutes say it is paid and set out the pay system, and the general meeting approves the maximum yearly amount.
• Dividend withholding: Dividends paid to a resident individual have a 19% withholding on account of income tax.
• Legal reserve: Before paying dividends, set aside 10% of profit for the legal reserve until it reaches 20% of share capital, and never pay out if net equity would fall below share capital.
• Accounts deadlines: Administrators prepare the annual accounts within three months of year-end, and the general meeting approves them within six months of year-end.
• Best mix: A moderate documented salary plus dividends for the remaining profit is the usual approach for a small profitable SL.
• Dividends: Dividends are not deductible for the company and carry no Social Security, but are taxed on the savings scale.

Paying yourself from your company: the whole process, step by step

From first decision to yearly filings

• Decide your pay mix and check your Social Security position (Should you pay yourself a salary, dividends or both?; Which Social Security regime applies when you work in your own company?): before you take any money out of the company

• Get the administrator pay written into the statutes and approved by the general meeting (Paying yourself as administrator: why the statutes decide): before the first payment of administrator pay

• Register in the autónomo scheme (RETA) if you meet the control or management tests, and ask whether you can still get the reduced starting fee: when you start working for the company; the reduced fee is for the first 12 months and only in limited cases for company owners

• Prepare the annual accounts (How to pay dividends legally): within three months of year-end

• Approve the accounts at the general meeting and decide any dividend (How to pay dividends legally): within six months of year-end Deadline: 30 June for a calendar year.

• File the approved accounts with the Mercantile Registry (How to pay dividends legally): within one month of approval Deadline: 30 July in the usual case.

• File Modelo 232 if your deals with the company pass the reporting limits (Lending to or borrowing from your own company): in the month after the 10th month following year-end Deadline: 1 to 30 November for a calendar year.

Documents you may need

Income and work

• Company statutes with a clause that sets out how the administrator is paid — Should you pay yourself a salary, dividends or both?
• Company statutes with a clause stating that the administrator office is paid — Paying yourself as administrator: why the statutes decide
• The company's accounting entries showing the loan as a debt to partners — Lending to or borrowing from your own company
• Ordinary employment contract — Should you pay yourself a salary, dividends or both?

The home and the lease

• A written loan contract between you and the SL — Lending to or borrowing from your own company
• Proof of an official date for the contract — Lending to or borrowing from your own company
• Contract approved by the board with a delegated board member — Paying yourself as administrator: why the statutes decide

Other documents

• Minutes of the general meeting approving the administrator's pay — Should you pay yourself a salary, dividends or both?
• General meeting decision approving the maximum yearly amount of administrator — Paying yourself as administrator: why the statutes decide
• The withholding return for interest paid to an individual — Lending to or borrowing from your own company
• Modelo 232 — Lending to or borrowing from your own company

Paying yourself from your company: questions that cross several articles

What mix of salary and dividends do advisers usually suggest for a small profitable company?

Advisers usually suggest a moderate, regular salary or administrator pay, with the rest of the profit taken as dividends. The pay should cover your personal tax allowances and Social Security costs and is deductible for the company, while dividends are taxed at the lower savings rates. Read Should you pay yourself a salary, dividends or both? and Paying yourself as administrator: why the statutes decide.

Do dividends count for Social Security contributions?

No, dividends carry no Social Security contributions themselves, but they can count in the income used to set an autónomo societario's contribution bracket. Confirm how with the Social Security office. Read Which Social Security regime applies when you work in your own company? and Should you pay yourself a salary, dividends or both?.

Do I still pay autónomo contributions if the company pays me nothing?

Yes, you must register and pay contributions if you meet the control or management tests, even when the company pays you no salary. See Should you pay yourself a salary, dividends or both?.

When can the company deduct what it pays me as administrator?

The company can deduct administrator pay when it is a booked expense linked to the activity, properly documented, and set out in the statutes and approved by the meeting. Without a valid statutes clause, the tax agency may treat it as disguised profit and refuse the deduction.

What tax is withheld from administrator pay and from dividends?

Administrator pay has a fixed 35% withholding, or 19% if the company's net turnover the year before was under 100,000 euros. See How to pay dividends legally.