The extended order of turnover in the choice of the company scheme

In order to understand what the owner of a company has to pay in taxes when choosing the company scheme, it is important to know the extended “tax order”.

The rule behind the “order of income”

The so-called “order of withdrawals” in VSL §5 determines where and in what order any private withdrawals must be transferred from the company. Below we have shown the extended order of income, which is how the taxpayer must specifically account in the respective accounts:

1. Reimbursement of operating costs (provided that they are not credited through the intermediate bill account)
2. Employee spouse (provided that the amount is not credited through the intermediate bill account)
3. The final corporate tax
4. Provision for later withdrawal primo
5. Return of capital, which is transferred to the taxpayer
6. Remaining profit for the year, which is transferred to the taxpayer
7. Additional withdrawals are transferred from the account of saved profits (using the FIFO method*)
8. After that, transfers are made from the deposit account.

*The FIFO method means that the oldest saved profit must be considered to be withdrawn first.

If, for one year, more is withdrawn to the private sphere than what is stated in the respective accounts in accordance with the above order of taxation, paragraphs 1 to 8, it means that the taxpayer borrows from the company and thus a negative deposit account arises.

A negative deposit account has the tax consequences that an interest correction is calculated — which must be further recognised as a withdrawal and thus taxed as personal income — and that the taxpayer is at the same time deprived of the possibility of saving profits in the corporate scheme.

The final deadline for disposing of withdrawals and deposits in the company scheme is the tax return deadline for the owner of the company.

We do not accept responsibility for any dispositions that may be made on the basis of the above without prior individual advice. Likewise, we accept no responsibility for any errors and omissions.

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