Very Basic Questions on Best Way to Extract Money from Ltd Company

TiGeR KiNgS

W.R.T the dividend payment would it be taxed 3 times before OP got it ?

e.g
Corporation Tax @ 12.5%
Dividend Tax @ 20% (or 41% not sure here)
Income Tax @ 20% and 41% on balance

barneystinson

maxer68 wrote: »

And another option,

If you already have a partner / wife - get her some art lessons, then get her to apply for artists tax exemption.

She paints a few pictures / murals etc etc and your company buys them to form part of the company's "art Collection".

Or add book publishing to the company's list of projects - get her to write a book, pay a decent upfront fee and then decided not to publish the book.


If you don't have a partner, start hanging about the national gallery

How does any of that benefit the OP in getting his hands on the money though?

Or are you suggesting that after the other party are paid for their work of art, that they return the money to you, in some kind of arrangement or scheme, the purpose of which is the avoidance of tax...? (in which case you should have a look at S.811 TCA 1997)

As for getting someone to get the Artist's Exemption, as already mentioned, this is easier said than done. Regardless of the exemption from Income Tax, they would be liable for VAT at the standard rate on sale of works of art (can't find the rate applicable for authors of books but I'd be surprised if it isn't the same).

Then, in an audit situation be prepared for market value of the transaction to be imposed - given that the "artist" or "author" in your scenario will not have sold any of their work to any unrelated parties for anything like the amounts you'd be talking about, and then of course interest and penalties to come into play...

maxer68

barneystinson wrote: »

How does any of that benefit the OP in getting his hands on the money though?

suppose thinking about it, what is her's is her's and what is your's is her's too:D

btw - it was a light hearted post to show really how difficult it is not to pay your fair share of tax. - I can't really see the OP hanging about the railings of merrion square on a sunday looking for a good artist to marry to avoid a few bob in tax - do you?:p

barneystinson

maxer68 wrote: »

suppose thinking about it, what is her's is her's and what is your's is her's too:D

btw - it was a light hearted post to show really how difficult it is not to pay your fair share of tax. - I can't really see the OP hanging about the railings of merrion square on a sunday looking for a good artist to marry to avoid a few bob in tax - do you?:p

Ehhh, unlikely, but it's amazing the lengths to which some people will go to avoid tax!

I just wanted to make sure nobody might actually take your suggestion seriously!

RATM

Can anyone recommend a simple book that explains tax for small businesses ?

TiGeR KiNgS

RATM wrote: »

Can anyone recommend a simple book that explains tax for small businesses ?

http://www.taxireland.ie/taxadvice/34859.aspx
last row

lomb

Would it not be better for money to grow within a company taxed at 12.5% rather than at 51% on personal income where lets say the company made more than you needed personally.
What could you buy with the companies money? Could you invest it in another company or business in the UK? Could you buy Irish or British residential property where it wasnt for personal use, ie to let? Buy shares on the stock market?

nompere

lomb wrote: »

Would it not be better for money to grow within a company taxed at 12.5% rather than at 51% on personal income where lets say the company made more than you needed personally.
What could you buy with the companies money? Could you invest it in another company or business in the UK? Could you buy Irish or British residential property where it wasnt for personal use, ie to let? Buy shares on the stock market?

The CT rate on non-trading income is 25%.

There's a 20% surcharge on investment income received by a close company.

Then your trading company might be treated as an investment company and perhaps loses CAT business assets relief and CGT retirement relief.

And then you have to try to get the money out! Ask your accountant about the double charge of CGT.

I think you've hit on a very good scheme to raise tax revenues, but that's about all.

AndyJB

optimusgrime wrote: »

Please forgive the simplicity of my questions here, I've not been able to find out too much about it with a bit of research thus far.

Let's say I own a Ltd company, I'm the sole director and own 100%

I believe it's not possible to have a ltd co with a sole director. One shareholder yes.

optimusgrime wrote: »

My company makes €100,000 profit in the first year, after I've paid all the costs/expenses/VAT etc that's what I have left in the bank. I have no employees and have paid myself no salary.

What's the best/most tax efficient way of me getting this money out of the company and into my bank account?

(1) Is corporation tax paid before or after salaries? Ie must the company pay corporation tax on the €100,000 before the company pays me a salary?

A) After.

optimusgrime wrote: »

(2) Can the company just pay me a salary of €100,000? I realise that with Employer PRSI, and higher band income tax I'm not going to see all that much of the €100,000 but is that how it's done?

A) You could pay yourself a very large salary, but that wouldn't be very tax efficient for you and probably not the company.

optimusgrime wrote: »

(3) Is there a better way of extracting money from the company?

A) Yes I'd imagine there is.

optimusgrime wrote: »

Would really appreciate any advice on this!

A) If you have the odd €100k resting in an account you would need to speak with a taxation specialist, yesterday!

Of course if a business managed to put that amount of cash through the books without having to pay the primary/only employee, any tax adviser and Revenue official with an ounce of sense would ask the question, what on earth have you been living on for the past 12 months while generating this nest egg? So, you'd need to have very good records for the various business transactions and proof of how you fed, housed and kept yourself for that period of time.

Best of luck