Dividend distribution: rules, timing and evidence

Updated March 2026 - The distribution of dividends is one of the most structuring acts in the life of a company. However, it remains a source of costly errors: early distributions, profit not really distributable, poorly anticipated taxation, incomplete supporting documents. In 2026, securing a distribution requires mastering the legal framework, the calendar, the applicable taxation and the documentation to be kept.

Dividends represent the part of the net profit that a company decides to pay back to its partners or shareholders, after approval of the annual accounts. This decision must be made during the ordinary general meeting of approval, which must be held within six months following the end of the financial year (article 131 of the Commercial Code).

In summary, the distribution of dividends assumes three cumulative conditions:

• The existence of a distributable profit (net profit for the financial year, reduced by previous losses and required reserves);
• The approval of the accounts by the general meeting;
• A formal decision to allocate the result, recorded in a report.

Without one of these conditions, the distribution is irregular and can be qualified as distribution of fictitious dividend, punishable by criminal law (article L. 242-1 of the Commercial Code).

The timing of a dividend distribution cannot be improvised. It follows a precise séquence:

1. Closing of the financial year and closing of the accounts#

The financial year must be closed and the accounts approved by the manager. It is this step that determines the actual distributable profit.

2. Convocation of the general meeting#

The AGM must be convened within the statutory deadlines, generally 15 days before the meeting date. The partners must receive the necessary documents: annual accounts, management report, draft allocation resolution.

3. Cast voting#

The assembly votes on the allocation of the result. The amount distributed cannot exceed the distributable profit as shown in the approved accounts.

4. Payment#

Payment takes place on the date set by the meeting or, failing that, within nine months following the end of the financial year (article L. 232-12 of the Commercial Code). Beyond this, the undistributed sums are prescribed for the benefit of the State after five years.

Point of vigilance 2026: In the event of a late distribution, the tax authorities may consider that the dividends are due for the year of payment and not the year of the decision, which modifiés the taxation of the partners.

Taxation of dividends varies depending on the nature of the beneficiary and the options exercised.

For natural persons#

Since 2018, dividends received by individuals have been subject to the single flat-rate withholding (PFU) of 30% (12.8% income tax + 17.2% social security contributions). The progressive scale option remains possible, with a 40% reduction on the amount of dividends.

A tax credit of 50% of the amount of dividends (capped at €230 for a single person, €460 for a couple) applies if you choose the scale.

For legal entities (companies subject to IS)#

The mother-daughter régime (article 145 of the CGI) allows a 95% exemption of dividends received, subject to holding at least 5% of the capital for two years. The 5% share of fees and charges remains taxable.

Withholding tax#

For dividends paid to individuals, a deposit of 12.8% is deducted at source by the distributing company, unless exempted by proof of référence tax income.

It is here that real legal and fiscal security comes into play. In the event of an inspection, the administration will require a complete and coherent file.

Essential pieces#

• Minutes of the AGM of approval of the accounts, with the resolution to allocate the result;
• Certified annual accounts (balance sheet, income statement, annex);
• Distributable profit calculation table, detailing retained earnings, reserves and net income;
• Certificate of payment for each partner, with date and amount;
• Proof of bank transfer or check given;
• Tax form 2787 (déclaration of distributed income) filed on time;
• Certificate of deposit given to each beneficiary.

Why is documentation critical?#

A poorly documented distribution exposes you to several risks:

• Tax adjustment if the administration reclassifies the dividends as hidden rémunération;
• Criminal sanctions in the event of distribution of fictitious dividends;
• Difficulties in the event of transfer of shares, the purchaser requiring proof of the regularity of previous distributions.

Hayot Expertise Advice: Keep the entire distribution file for at least ten years, i.e. the limitation period under common law in tax matters. A well-organized file can be recognized by its ability to be reread and understood several months after the fact, without ambiguity.

Distribute without actual distributable profit#

Certain managers distribute on the basis of an accounting result not yet established or by ignoring previous losses. The distributable profit is calculated precisely: net result for the financial year + profit carried forward - compulsory legal reserves - previous losses.

Confusing cash flow and distributable profit#

A company may show significant accounting profit but not have the cash flow to pay dividends. In this case, the distribution must be deferred or adjusted.

Neglect statement 2787#

Form 2787 must be filed no later than the second business day following dividend payment. A delay results in a fine of €100 per omission or inaccuracy.

Forget the 12.8% deposit#

The distributing company is responsible for collecting the deposit. In the event of an omission, it may be required to pay the undeducted tax.

Optimization does not mean tax evasion. It consists of choosing the framework best suited to your situation.

Arbitrate between dividends and rémunération#

For a manager of an SARL or SAS, the choice between dividends and salary has direct consequences on social protection and the overall cost. Dividends do not generate social security contributions (excluding CSG/CRDS), but do not constitute a supplementary retirement base either.

To delve deeper into this trade-off, consult our analysis Dividends vs salary.

Anticipate cash flow#

A distribution of dividends must be planned in advance. Ideally, the manager and his accountant simulate the distributable amount as soon as the accounts are closed, even before the meeting is convened.

Use associate current accounts#

If the cash flow is insufficient at the time of distribution, the company can record the dividend in the partner's current account. The dividend remains acquired for tax purposes, but payment is deferred.

To deepen your understanding of dividend distribution, we recommend these additional resources:

• Dividend distribution — General guide on the principles and mechanisms
• SARL Dividends — Specificities of SARL distributions
• Dividends vs salary — Detailed comparison for managers

Hayot Expertise Advice: A well-prepared dividend distribution can be recognized by a simple file to reread several months later: decision, calculation, justification and bank flows are perfectly aligned. Don't let documentation become a weak point in your corporate governance.

We help managers and partners to prepare the allocation of results, establish supporting documentation and optimize the tax treatment of distributions. Each situation is unique: SARL, SAS, holding company, associates, natural or legal persons — we adapt our support to your structure.

Secure your dividend distributions

In 2026, the security of a distribution of dividends depends as much on the quality of the evidence kept as on the amount distributed. The legal framework is precise, the tax system is demanding and the sanctions in the event of irregularity are heavy. It is this documentary rigor - meeting minutes, calculation of distributable profit, 2787 déclaration, proof of payment - which protects the manager and the partners in the event of a tax audit.

Do not treat the distribution of dividends as a simple accounting formality. It is an act of governance which engages the responsibility of the company and its managers.

(Official sources: Commercial Code — articles L. 232-11, L. 232-12 and L. 242-1 on the allocation of results and fictitious dividends; Service-Public.fr — taxation of dividends; impôts.gouv.fr — income from movable capital, PFU and déclaration 2787)