As a first step in the process, companies are obligated to settle their liabilites for corporate income tax at the rate of 9%. After tax liabilities are settled, joint stock companies as well as limited liability companies are able to distribute dividends in line with the Law on Business Entitites and per the nominal value of the shares or percentage of ownership in the LLC.
Shareholders or owners of LLCs can be legal or physical entitites. Taxation of the distribution of dividends is done in line with the Law on Corporate Income Tax (for legal entities) or the Law on Personal Income Tax (for physical persons).
In cases when the shareholders or owners of an LLC are legal entitites, a withholding tax of 9% has to be calculated and paid against dividends according to Article 29 of Law on CIT.
In the other situation, when the shareholder or owner of an LLC is a physical person, the base for taxaton is the gross amount of the distributed dividend, on which a 9% tax should be calculated, witheld and paid by the company on behalf of the shareholder or owner per Article 50 of the Law on Peronsal Income tax. In addition to this, the dividend-distributing company should pay sur-tax (15% or 13% depending on the municipality where the company has a seat).
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