Salary is pay for the work you do for the company. A dividend is a distribution of profit to its shareholders. To compare them, look at the company’s tax, your tax and the contributions due on salary. The dividend rate alone does not settle the choice.
How is a shareholder’s salary taxed?
If a shareholder is an employee and receives monthly pay, the company accounts for it through payroll. Articles 22 to 24 of Law no. 29/2023 set the personal deductions and the employment income tax rates. The rates are 13% on annual taxable employment income up to ALL 2,040,000 and 23% on the portion above it. The tax base is calculated after applying the relevant deductions.
Salary for work can reduce the company’s taxable profit if the deduction conditions are met. Articles 48 and 50 cover documentation and payment through the banking system or a licensed electronic money institution. Employee and employer contributions also need to be calculated separately.
How is a dividend taxed?
The company distributes available profit after its own tax in line with a distribution decision. A dividend is not a deductible expense for the company. The general dividend tax rate is 8%, withheld by the company.
The standard corporate income tax rate is 15% under Article 41. Under the transitional provision in Article 69(1)(dh), qualifying entities with annual gross income up to ALL 14 million have a 0% rate through 31 December 2029. Check the regime that applies to your company before selecting a rate.
Compare income tax only
Enter the same annual amount before tax for each scenario. Select the rate that applies to your company. The tool assumes the salary is deductible for the company and the personal deduction applies to that employment. The amount after income tax and before contributions is not take-home pay. It does not tell you which option is better.
Compare income tax on salary and dividends
Use the corporate rate that applies to the company.
This compares income tax only. Employee and employer contributions can change the result.
Enter a positive amount in whole lek and choose the applicable rate to see the comparison.
We assume the salary is for work, deductible against taxable profit, and your only salary in the year. The personal deduction applies at this company. The model excludes child allowances and special regimes.
Your choices stay on this page and reset on reload. They are not sent to Pivot or the tax authority.
Official source: Law no. 29/2023 on income tax, as amendedIllustrative example: With annual gross salary of ALL 2,400,000 and a personal deduction of ALL 360,000, employment income tax in this model is ALL 265,200. If the same amount is taxable profit before distribution at a 15% corporate rate, the company pays ALL 360,000. The 8% tax on the remaining dividend is ALL 163,200. The example excludes both employee and employer contributions.
What to check before distributing profit
- Available profit and decision. Check the amount available for distribution and document the decision. Article 56(2) requires the decision on the use of profit to be deposited with the tax authorities by 31 July.
- Withholding. For dividends paid out, Article 56(4) sets declaration and payment of withholding tax by the 20th of the following month. If a dividend is approved for distribution and remains unpaid, Article 56(2) provides for withholding and transfer at the end of the third month after the decision month. Check the dates for your case.
- Personal obligations. Other income, deductions, tax residence and annual return obligations need a separate review. The model does not cover international tax treaties.
Use the salary calculator to estimate gross pay, net pay and employer cost. For your company’s circumstances, talk to Pivot about payroll and declarations.
Sources checked on 12 November 2026. Pivot prepared the calculation and example for the scenario described above.
