Depending on the form of enterprise you have, you can possibly draw a salary for yourself from the company. This salary is earned income and therefore subject to (earnings-based) income tax. Earned income is taxed at progressive rates, which means the more you earn, the higher the rate will be. Once you start drawing a salary, request a tax card from your local Tax Office and pay taxes in accordance with the tax rate marked on your tax card.
Companies are required to pay advance tax on projected annual profit. Tax rate depends on the form of company. During the first accounting period, the amount of advance tax to be paid is calculated based on the profit estimate provided by the entrepreneur. Taxes for further accounting periods are estimated based on the previous accounting period. The Tax Authority sends tax invoices for the estimated amounts. If your company’s turnover and profit projection change during the year, report this to the Tax Authority so the advance tax can be readjusted.
If you wish to draw profits from the company for your personal use, all such amounts are subject to a capital income tax. The rate of this tax varies, depending on the amount that is drawn out.
At the close of an accounting period, file a tax return in which you report the full turnover and profit of the accounting period in question. Final taxes are always calculated and charged based on this information. As a result, you may receive a tax refund or be liable to pay back tax.