Calculation and Taxation of the Administrator's Compensation: An Essential Guide

Administrator's Compensation

The compensation for the administrator of a company must be defined by the shareholders' meeting, which also determines the payment methods and schedule, which can be monthly, quarterly, or annually. This remuneration, intended for an individual or a board of directors, represents a deductible expense for the company, useful for legally implementing tax-saving strategies.

Calculation of the Administrator's Compensation

The determination of the compensation can be fixed, variable, or a combination of both, based on the company's performance. Additionally, it may include benefits or company shares. It is essential for the shareholders' meeting to review and, if necessary, adjust the remuneration to avoid tax issues, especially if the company is unable to financially support it during the year.

Example of Calculation

Let's assume a compensation of €50,000: applying an IRPEF tax rate of 38%, the net amount would be €31,000, on which social security contributions would then be calculated.

INPS Contributions

The active company administrator must register with the INPS separate management, paying a contribution rate that is generally around 34%. If the administrator is already covered by other pension schemes, the rate is reduced to 24%, but the specific rates of the relevant pension fund apply.

Taxation and Tax Benefits

The administrator's compensation is taxed as employment income, and the benefits are regulated accordingly. It is deductible from the company's taxable income if paid within the legal deadlines and if it meets certain criteria of proportionality and traceability.

Recommendations

An excessively high compensation can be counterproductive from a tax perspective. Often, it is more advantageous for the company to offer alternative forms of remuneration, such as benefits or dividends, which can result in greater tax savings.

Severance Pay (Trattamento di Fine Mandato - TFM)

The Severance Pay (TFM) represents an additional opportunity for tax savings, as it is a sum set aside and deductible annually, paid at the conclusion of the administrator's mandate. To benefit from tax advantages on this item, the TFM must be included in the company's bylaws and approved before the appointment of the administrator.

Conclusion

This guide provides an overview of the strategies and considerations necessary for the effective and compliant management of the administrator's compensation, essential for optimizing the company's financial resources.

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