As of January 1, 2023, taxpayers may be required to exclude certain payments made to a shareholder or related party from tax deductible costs to the extent they constitute a hidden dividend.
Under the current regulations, costs may be considered a “hidden dividend” if:
At the same time, the restrictions resulting from point 2 and 3 are not to apply if the sum of the costs incurred in the tax year by the taxpayer, which constitute a hidden dividend under these provisions, is lower than the amount of gross profit, within the meaning of the accounting regulations, obtained in the tax year in which these costs were included in the financial result of the taxpayer.
Although the entry into force of the so-called “hidden dividend” provisions has been postponed until 1 January 2023, taxpayers should already today bear in mind the shape of current and planned agreements concluded within the group, including in particular with shareholders/partners, as well as the nature of the resulting payments.
BUT: Item 2. and 3. does not apply when sum of costs, which under those rules are hidden dividend and were incurred by the taxpayer, does not exceed gross profit, earned-out in the financial year in which those costs were included in taxpayer’s financial result.
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