Wages or dividends: Tax tips for entrepreneurs

The question of whether an entrepreneur in Switzerland should receive income as wages or dividends is a frequently discussed topic. Both forms have tax implications, both for the company and for the private tax statement. It is therefore essential to familiarize yourself thoroughly with the advantages and disadvantages of both options.

For many investors, real estate is not only a way to build up stable, long-term assets, but also a way to achieve attractive returns. However, as with any investment, real estate also incurs taxes. One of the ways to optimize the tax burden is to set up a public limited company (AG). But when is it really worth taking this step?

Wages:

Advantages:

1. Social security contributions: AHV, IV, EO and ALV contributions are deducted from a salary. This can have a positive effect on future pension entitlements.
2. Company pension scheme: Salary income can be paid into the 2nd pillar (BVG), which can lead to additional tax advantages.

Disadvantages:

1. Higher income tax: Salaries can generally be subject to higher income tax than dividends.

Dividend:

Advantages:

1. Partial taxation: In Switzerland, dividends benefit from partial taxation at cantonal and communal level. This can lead to significant tax savings.
2. Flexibility: The distribution of dividends can be adjusted depending on the business situation and strategy.

Disadvantages:

1. No social security contributions: No social security contributions are deducted on dividends. This can lead to lower pension entitlements later on.
2. No payment into the 2nd pillar: Without salary income, no contributions can be paid into the company pension scheme (2nd pillar).

Tax tips:

1. Combined payout: Some entrepreneurs opt for a combination of salary and dividends. This makes it possible to benefit from the advantages of both options and minimize the tax disadvantages.
2. Annual review: It is advisable to review the optimal distribution between salary and dividend annually. Changes in the financial situation, in the business or in the tax lawscould make an adjustment necessary.
   

   3. Expert advice: The tax implications of salary and dividend payments can be complex. It is advisable to seek advice from an experienced tax advisor or corporate tax specialist. They can provide personalized advice and ensure that you find the best solution for your personal and business situation.

   4. Long-term planning: Think long-term when deciding on salary or dividend payments. Consider your financial goals, pension planning and the tax implications in retirement.

   5. Avoid abuse: Swiss tax laws are strict when it comes to abuse. Make sure that your income distribution complies with the applicable laws and does not cause any legal problems.

   Overall, the choice between salary and dividends in Switzerland is a complex one that requires careful consideration. A well-thought-out strategy can offer significant tax advantages while ensuring financial security for the future. Professional advice and individual planning are essential to make the best decisions for your business and personal finances.

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In a world characterized by financial issues and uncertainty, the Zwei Wealth office provides clarity and support. With extensive expertise and a holistic approach, we enable you to embark on your financial future with confidence. Please do not hesitate to contact us if you have any further questions or would like a personal consultation.