Starting withthe 2027 tax year, a new rule should be of particular interest to executives of small companies.
As a reminder, a company that meets the legal requirements is eligible for the reduced rate of 20% on the first €100,000 of taxable income.
One of these conditions concerns the compensation paid to at least one corporate executive who is a natural person.
What’s Changing for the 2027 Tax Year
The minimum compensation is no longer set at €45,000, as it was in the previous fiscal year.
It is now indexed annually and amounts to:
€51,000 for the 2027 tax year, i.e., for fiscal years ending in 2026 or during the 2026–2027 period.
However, it is important to note one key distinction: when the company’s taxable income is less than €51,000, it is that taxable income that serves as the threshold to be considered.
Example
A company reports taxable income of €40,000. Under these circumstances, the minimum compensation to be paid to the executive will be €40,000, not €51,000.
Important Notice for Company Executives
Since this minimum compensation is now indexed annually, the threshold may change again in future fiscal years.
It is therefore important to take this requirement into account when determining the executive’s compensation and not to wait until the end of the fiscal year to verify whether the conditions for the reduced rate have been met.
In summary:
- 2026 Tax Year: €45,000
- 2027 Tax Year: €51,000
- Starting in 2027: amount adjusted annually
- If the taxable income is less than the threshold: the compensation must be at least equal to that income.
Checking in advance can help you avoid unpleasant surprises when calculating corporate income tax.