Should you pay yourself a salary, dividends or both?

Terms used

• IRPF — The IRPF is Spain's personal income tax, charged on pay at progressive rates and on dividends at lower savings rates.
• Autónomo societario — The autónomo societario is an owner who controls and manages an SL and must pay into the self-employed Social Security scheme.
• Gestor — A gestor is a professional adviser who handles tax, Social Security and company paperwork for you.
• SL — An SL is a Spanish limited company, the usual structure for small businesses.

Key rules

• 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.
• Social Security: If you control and manage your SL, you pay contributions even when the company pays you nothing.
• Statute clause: Administrator pay needs a statute clause and meeting approval, or it can lose its tax deduction.

The short answer

For most owners of a small, profitable company (an SL), a mix works best. Pay yourself a moderate, regular amount as administrator. Take the rest of the profit as dividends. There is no single rule that suits everyone. The right split depends on how much profit the company makes.

How each option works

Salary or administrator pay

• The company can deduct it, so it lowers the company's profit and its corporate tax.
• You pay personal income tax (IRPF) on it at progressive rates. The more you take, the higher the rate.
• It counts as income for your Social Security contributions.

Dividends

• The company cannot deduct them. They come out of profit after corporate tax.
• You pay IRPF on them on the savings scale, which is lower than the scale for pay.
• They carry no Social Security of their own.

Why a mix usually works

Set your pay high enough to do two jobs. It should use your personal tax allowances, and it should cover your Social Security cost. Above that level, dividends are often cheaper overall, because pay is taxed at progressive rates and dividends at savings rates. A gestor can model this for your expected profit. The calculator below lets you compare mixes.

Social Security is due even with no pay

If you control at least 25% of an SL and also manage it, you normally have to register as an autónomo societario. The same applies if you are an administrator with control, or if you hold at least 50% together with family. You then pay contributions even if the company pays you nothing. There is a minimum base for the lowest bracket, and the bracket amounts are set each year.

Dividends do not carry Social Security themselves. But the system that sets your contribution base can count dividends and profit shares as part of your income. Confirm with the Social Security office how yours will be counted.

Corporate tax rate

The general rate is 25%. A newly created company that carries on a real activity pays 15% on its first profitable year and the next one. This does not apply if the company was part of a group, or if related people carried on the activity before. Micro and small companies have lower rates that are being phased in year by year. Check the rate for your tax period with the tax agency.

Make the pay valid

Pay that is not set up correctly can lose its tax deduction. Hacienda can treat it as a disguised profit distribution. You need:

• A clause in the company statutes that sets out how the administrator is paid.
• Approval of the pay by the general meeting.
• Proper accounting records, with the pay linked to the activity.

Employment contract as well?

Usually not. If you administer the company and also do management work, that is one relationship, and a separate employment contract for it is not valid. Your pay is set through the statutes. An ordinary employment contract is possible only for technical or other work clearly separate from administering and managing. Have a labour adviser review your specific duties.

Next steps

Use the checklist below to work through the numbers. If the company cannot pay you in the first year, see the question on that below.

Choosing between options

How should you take money out of your company: pay, dividends or both?

• Mostly pay: Fits when you need a regular income. The company deducts the pay from its profit, but you pay progressive income tax on it and Social Security costs follow.

• Mostly dividends: Fits when the company has surplus profit beyond your needs. Dividends come after corporate tax (25% in general), are taxed at the lower savings rates and carry no Social Security. The company withholds 19% on account of your income tax.

• A mix of both: Fits most owners of small profitable companies: a moderate regular pay and the remaining profit as dividends.

Pay yourself enough to use your personal tax allowances and cover your autónomo societario Social Security cost, with a statute clause behind it.

Documents you need

• Company statutes with a clause that sets out how the administrator is paid, issued by the company and registered with it

• Minutes of the general meeting approving the administrator's pay

• Ordinary employment contract, only if you do technical or other work clearly separate from administering or managing the company

Checklist

• Check which corporate tax rate applies to your company for the current tax period, including whether the lower rate for new companies still covers you.

• Ask the Social Security office whether you must register as an autónomo societario (the self-employed scheme for company owners), based on your share and role.

• Work out your yearly Social Security cost, which is due even if the company pays you nothing.

• Ask a gestor to model the split between pay and dividends for your expected profit.

What to watch out for

• Pay without a valid statute clause can lose its tax deduction: Tax inspectors have challenged administrator pay that has no valid basis in the statutes. They treat it as a disguised distribution of profit, so the company cannot deduct it from corporate tax. Make sure the statutes set out the pay system before you pay yourself. The rules for this are set out in Paying yourself as administrator: why the statutes decide.

• Pay that is not documented or approved can be disallowed: Pay is deductible only if it is an accounting expense, linked to the activity, properly documented and not a donation. It must also be approved by the general meeting. Record each payment in the accounts, keep the meeting minutes approving it and keep proof that it relates to your work.

What if the company cannot pay you in the first year?

What if the company cannot pay you in the first year?

You still owe Social Security every month, even if the company pays you nothing. Plan for that bill before you plan for your own income.

Social Security does not wait for profit

If you own at least 25% of the SL and also manage it, you must be registered as self-employed (RETA). The same applies if you are an administrator with control of the company, or hold at least 50% together with close family. Employees without control are not covered by this.

Contributions are based on a minimum base, so a monthly fee is due at zero income. The brackets change every year, so check the current figures with the Seguridad Social.

A reduced fee is unlikely to apply to you

The flat rate for new self-employed workers is generally not open to administrators with control of an SL. Even where it can apply, you do not qualify if:

• you were registered as self-employed in the previous 2 years (3 if you used the flat rate before);
• you have outstanding debt with Social Security.

Ask the Seguridad Social whether you qualify before you rely on it in your budget.

Legal ways to fund your living costs

The options are few, and each has conditions:

• Salary. You need a real job in the company, a contract and the right Social Security registration. If you are paid as administrator, the estatutos (the company's bylaws) must provide for that pay, or the company cannot deduct it. The pay must also be reasonable. This works only if the company has the cash.
• Fees for real services. You can invoice the company for work you genuinely do, with VAT and withholding.
• A loan from the company to you. It needs a written agreement, market interest and a repayment schedule. It is a debt you must repay, and the company must have the cash to lend.
• Putting your own money in. You can lend money to the company to cover costs, including your own Social Security fee. This goes the other way, so it does not pay you.
• Capital reduction. The company can return capital to the partners. This needs a shareholders' meeting, a public deed and registration in the Registro Mercantil. Creditors can object, and it cannot leave the company below its legal minimum equity. It is slow and rarely suits a first-year company.

Dividends are not an option in a loss year. They can only come from distributable profit, after covering losses and the legal reserve.

What to avoid

Do not simply take cash out of the company's account. The tax office can treat unexplained withdrawals as something else, such as undeclared pay or a disguised dividend, and tax you on it.

Before your first month ends, ask a gestor or accountant to check the company's equity and your role, then choose from the options above.

Compare salary and dividend mixes for your company

Work it out

What you enter

• Company profit before paying yourself (EUR): Your accountant's year-end forecast or your draft profit and loss account.
• Gross yearly salary you pay yourself (EUR): The yearly amount you plan to pay yourself, as set out in your statutes and contract.
• Company tax rate (%): Your accountant, or the AEAT, Spain's tax agency. The general rate is 25%; a newly created company may pay 15% in its first profitable years.
• Average income tax rate on your salary (%): Your accountant, or the AEAT income tax simulator for your region.
• Your monthly self-employed Social Security fee (EUR): The Seguridad Social bracket table for the current year, or your accountant.

Figures used

• Withholding on dividends paid to a resident individual: 19 % (as of 2025)

Worked example (with Company profit before paying yourself 60,000 EUR, Gross yearly salary you pay yourself 24,000 EUR, Company tax rate 25 %, Average income tax rate on your salary 24 %, Average income tax rate on your dividends 21 %, Your monthly self-employed Social Security fee 330 EUR)

When the sum misleads

• If the salary is higher than the profit, the sum caps it at the profit; a loss year allows no dividend.
• The dividend withholding is paid on account: your final bill may be higher or lower once your tax return is done.
• Your Social Security fee may rise if the income counted for it, which can include your share of profits, moves you into a higher bracket.
• This sum treats you as a self-employed owner-manager, so it adds no employer Social Security on your own salary. Ask your accountant if you are in another situation.
• Dividends can only be paid from distributable profit after the legal reserve is covered, so check that before you plan a payout.

Frequently asked questions

Can I have an employment contract as well as administrator pay?

No, not for the management work you do as administrator, because that work is covered by one single relationship with the company.

Do I still pay Social Security if my company pays me no salary?

Yes, you still pay Social Security as a self-employed owner if you meet the tests, for example controlling at least 25% of an SL while also managing it. Contributions are due whether or not the company pays you, and the lowest income bracket has a minimum base.

What corporate tax rate does a newly created company pay?

A newly created company carrying on an economic activity pays 15% on its first profitable tax base and the following tax period, instead of 25%. This does not apply if the company was part of a group or if related persons carried on the activity before.