Allocation of the accounting result: from legal reserve to dividend (2026)

Quick answer. To move from profit to a net dividend: you first allocate the result (legal reserve of 5% up to 10% of capital), the meeting votes a gross amount, then the 31.4% flat tax (12.8% income tax and 18.6% social levies) applies. A gross dividend of 10,000 euros therefore leaves 6,860 euros net.

Every year, once the accounts are approved, the meeting decides what to do with the result: keep part of the profit in reserves, carry some forward, or distribute it as dividends. This is the allocation of the result. It is a legal decision (voted and recorded in the minutes) that then drives the taxation of the dividend.

This article walks through the three steps, from the accounting profit to the net dividend in hand, with the 2026 rules. To run your own figures, the dividend calculator follows exactly this logic and gives you the gross amount to record in the minutes.

At the year-end, the accounts show a net result: a profit or a loss. The allocation of the result is the decision by which the shareholders determine what to do with it. It is voted at the annual ordinary meeting that approves the accounts, held within six months of the year-end (for an SASU, it is a decision of the sole shareholder).

Two ideas to keep in mind straight away:

• You do not distribute the gross accounting result: you distribute a distributable profit, calculated after mandatory allocations.
• The amount voted at the meeting is a gross amount: the tax (the flat tax) is then withheld on top of it.

This profit is already a result after corporate tax (IS): the dividend therefore bears a second layer of tax, which is why the salary versus dividend trade-off matters.

The Commercial Code sets an order. You start from the net result of the year, then apply the allocations one by one.

Clear prior losses#

If the company has a debit retained earnings balance (past losses not yet absorbed), the profit for the year is used first to clear them. No distribution is possible until these losses are cleared.

Fund the legal reserve (5% up to 10% of capital)#

The legal reserve is compulsory (article L232-10 of the Commercial Code). Each year, the company sets aside 5% of the profit (reduced by prior losses) into this reserve, until it reaches 10% of the share capital. Once that 10% ceiling is met, the allocation is no longer compulsory.

Example: for a capital of EUR 10,000, the legal reserve is capped at EUR 1,000. A company that distributes each year quickly builds this reserve, then no longer needs to fund it.

Optional reserves and retained earnings#

Beyond the legal reserve, the meeting may decide to place part of the profit into optional or statutory reserves, or to leave it as credit retained earnings (profit kept, carried to the next year and distributable later).

The distributable profit#

This is the balance that is genuinely distributable (article L232-11):

Distributable profit = result for the year - prior losses - legal reserve allocation - other reserves + credit retained earnings.

This amount is the ceiling of what the meeting can vote as dividends. Distributing beyond it is a fictitious dividend, penalised and challenged in a tax audit.

Once the distributable profit is known, the meeting votes the dividend amount. This amount is the gross dividend: it is the figure recorded in the minutes of the meeting. Any undistributed balance goes to retained earnings.

Remember: the gross figure in the minutes is not what the shareholder receives in the bank. It is the base on which the flat tax will apply.

By default, a dividend paid to an individual is subject to the single flat-rate levy (PFU), the flat tax. Since 1 January 2026, its rate is 31.4%, broken down into:

• 12.8% for income tax (an advance, the non-final flat withholding, taken at source);
• 18.6% of social levies (the CSG rose to 10.6% with the 2026 social security act, raising social levies from 17.2% to 18.6%). These 18.6% combine the CSG (10.6%), the CRDS (0.5%) and the solidarity levy (7.5%).

The shareholder therefore receives 68.6% of the gross dividend. On a gross dividend of EUR 10,000 voted at the meeting: EUR 1,280 of income tax advance, EUR 1,860 of social levies, so EUR 6,860 net in hand.

Two useful points:

• The 12.8% is only an advance: it is credited against your final income tax and refunded if your bracket is low. The 18.6% of social levies is final.
• Waiver of the advance: households whose reference taxable income of the last but one year (N-2) is below EUR 50,000 (single) or EUR 75,000 (couple) can ask to waive the 12.8% advance, on a statement sent to the company before 30 November. The social levies remain due.

On the company side, the withheld levies are reported and paid on form 2777, by the 15th of the month after payment.

In practice, a manager often reasons the other way round: "I want to receive a given net amount, how much do I vote?". This is a reverse calculation (gross-up):

Gross dividend to vote = net you want / 0.686.

To receive EUR 6,860 net, you must vote EUR 10,000 of gross dividend in the minutes. The dividend calculator does this automatically and shows the exact gross amount to record.

Be careful if you are a majority manager of an SARL, EURL or SEL (self-employed). The share of dividends above 10% of (share capital + share premiums + average shareholder current account) is not just subject to the flat tax: it bears self-employed social contributions (article L131-6 of the Social Security Code). This can significantly increase the cost of the distribution.

An SASU or SAS president, treated as an employee, is not affected: their dividends remain at the pure flat tax. This is one of the structuring trade-offs between salary and dividends.

All of the above assumes an individual shareholder. If the dividend flows up to a shareholding company (for example a holding), it does not fall under the flat tax but under the parent-subsidiary regime: the dividend is almost fully exempt from corporate tax, only a 5% share of costs and expenses being added back (subject to holding at least 5% of the capital for two years). This is what makes a holding useful to capitalise or reinvest without immediate tax friction.

The 31.4% flat tax applies by default, but you can opt for taxation at the progressive income tax scale. This option unlocks a 40% allowance on the dividend (article 158-3-2 of the tax code), but it is global for all the household's investment income, taxes the rest at your marginal rate, and keeps the 18.6% of social levies. It is only worthwhile for low brackets, and is calculated case by case: the deductible CSG fraction changed with the 2026 social security act and must be checked for your situation.

• Distributing more than the distributable profit (a fictitious dividend).
• Forgetting the legal reserve allocation while the 10% ceiling is not reached.
• Confusing the gross figure in the minutes with the net received, and so voting an amount that does not leave the expected net.
• Not anticipating the 10% rule for a majority manager.
• Voting a dividend without checking the cash actually available.
• Forgetting the 2777 return and the payment of the levies.

To run your own case with figures, use the calculator below: it starts from the profit, the gross or the net you want, and details the flat tax at every step.