Taxation – shares in a limited liability company

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Income from dividends in a business corporation and also proceeds from the sale of a share in a business corporation are taxable. In the case of a share sale, the proceeds are exempt from income tax after the time test is met. Taxation differs in terms of rates and exemptions for legal entities and individuals. The following text is only a brief overview of the issue.

Income tax rate

The income tax rate is 15% for individuals and 19% for legal entities.

Contributions to the registered capital of a corporation are exempt from income tax.

Dividends

Dividends are subject to a withholding tax of 15%. If the company’s member or shareholder is a legal entity whose share in the company’s registered capital is at least 10% for 12 consecutive months (and this condition can be met thereafter), the dividend income is tax-exempt.

Proceeds from the sale of shares in a limited liability company

Proceeds from the sale are exempt from income tax after the expiry of the time test, which is

  • five years in the case of shares in a limited liability company (and in a cooperative)
  • three years in the case of shares in a joint-stock company

What situations do we typically handle for our clients regarding taxation of shares in LLCs?

  • Sale of shares in a company
  • Purchase of shares in a company
  • Corporate income tax
  • Taxation of income from shares
  • Sale of shares in a start-up
  • Taxation of mutual fund investments
  • Taxation of profits from trading in cryptocurrencies (Bitcoin, Ethereum...)
  • Taxation of dividends
  • Determination of the dividend amount
  • Legal advice on the decision not to pay dividends