This is how various types of company are taxed

As an entrepreneur, you are responsible for the taxes involved in business operations from the moment you set up your company. Find out how the type of company affects taxation and liability.

Who is responsible for taxes?

Business operator and self-employed person

The business operator or self-employed person pays the taxes personally. A business name is not a separate taxpayer. The income you receive from your business is taxed as your personal income.

Limited liability company

A limited liability company is an independent taxpayer. The income of a limited company does not affect the taxation of a single shareholder.

Cooperative

A cooperative is an independent taxpayer. The income of a cooperative does not affect the taxation of a member of the cooperative.

General partnership

The taxes are paid by the entrepreneur who owns the company. The income is divided into income shares of the partners, for which the partners pay taxes. A general partnership is not a separate taxpayer in income taxation.

Limited partnership

The taxes are paid by the entrepreneur who owns the company. The income is divided into income shares of the partners, for which the partners pay taxes. A limited partnership is not a separate taxpayer in income taxation.

How much taxes must be paid?

Business operator and self-employed person

Business income is divided into capital income and earned income. 

For capital income, you pay 30% tax. When the capital income exceeds EUR 30,000, the tax rate for the exceeding share is 34%. 

For earned income, you pay tax according to a progressive tax schedule.

Limited liability company

A limited liability company pays 20% tax on its profits.

Cooperative

A cooperative pays 20% tax on its profits.

General partnership

 

A partner’s share of the income is divided between capital income and earned income. 

For the capital income, you pay 30% tax. When the capital income exceeds EUR 30,000, the tax rate for the exceeding share is 34%.

For earned income, you pay tax according to a progressive tax schedule.

Limited partnership

A partner’s share of the income is divided into capital income and earned income.

For the capital income, you pay 30% tax. When the capital income exceeds EUR 30,000, the tax rate for the exceeding share is 34%.

For earned income, you pay tax according to a progressive tax schedule.

Can I take wages from the company?

Business operator and self-employed person

You cannot pay wages to yourself or your spouse. You may withdraw money (private withdrawals) from your business.

Limited liability company

As a partner, you may withdraw assets from the limited liability company as pay or dividend. Tax-exempt private withdrawals are not possible. A loan taken from the company is treated as a shareholder loan.

Cooperative

Cooperatives may pay salaries or compensation to members.

General partnership

Partners can be employed by the company and can be paid wages.

Limited partnership

Partners can be employed by the company and can be paid wages.

Who is responsible for the company's commitments?

Business operator and self-employed person

As the business operator or self-employed person, you are personally responsible for all of the company's commitments.

Limited liability company

As a shareholder, you are responsible for the company’s commitments up to the amount of capital you have invested, unless you have provided guarantees for loans.

Cooperative

As a member of a cooperative, you are responsible for the cooperative’s commitments up to the amount of capital you have invested, unless you have provided guarantees for loans. This is usually a participation share.

General partnership

As a partner, you are responsible for the company's commitments, including commitments made by other partners.

Limited partnership

As a responsible partner, you are responsible for the company's commitments, including commitments made by other responsible partners. As a silent partner, you are only responsible for the amount you have invested.

For whom is each type of company suitable?

Business operator and self-employed person

A business name is suitable for an early-stage small entrepreneur. It is the simplest type of company and easy to set up.

Limited liability company

A limited liability company is suitable for all types of business. The advantage of a limited liability company is the associated limited responsibility: Shareholders are responsible for the company’s commitments up to the amount of capital they have invested, unless they have provided guarantees for loans.

Cooperative

A cooperative is a flexible company type. It is suitable for members who are committed to its goals and work actively.

General partnership

A general partnership is suitable for family businesses.

Limited partnership

A limited partnership is suitable for family businesses.

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