The Executive’s tax system

The tax treatment of payments for the benefit of an officer depends on the corporation’s tax treatment and the nature of the duties he or she performs in the corporation. Understand in this article the Executive’s tax system.

1. In companies subject to tax as lawful right

1. Remuneration imposed in salaries and wages
2. Taxable remuneration
3. Net professional expense income
4. Removal of directors’ fees
5. Total compensation not excessive
6. Taxation of dividends

2. In partnerships

1. Companies subject to the IS (Impôt société) which is tax based on profit by option
2. Civil societies
3. Companies not subject to the IS (Impôt société)
4. Withholding tax at source

• In companies subject to tax as lawful right

1. Remuneration imposed in salaries and wages: In companies subject to the corporate income tax, the remuneration allocated to executives is in principle taxable to the IR (Impôt sur les revenue) as salaries and wages. 
2. Taxable remuneration: Taxable remuneration corresponds to that made available to the executive during the tax year, although it is credited to a partner’s current account or to an accrued expenses account. Bonuses and other benefits in kind are taxable remuneration elements. Allowances, reimbursements and lump-sum expense allowances are also taxable as salaries. Benefits in kind are in principle valued at their actual amount. However, certain benefits may be subject to a flat-rate assessment even if there is no cumulation between an employment contract and a corporate office.