Salary or dividend from your own company – which pays better?

There is no single answer, but for most owners a combination works best: salary up to the level that gives the cash and the National Insurance rights you want, and dividends once further salary carries a high marginal cost. Salary is deductible in the company and builds sick pay and pension rights, but costs employer's contributions. A dividend does neither.

The basic difference

Salary is normally a deductible cost in the company. Salary and the related employer's national insurance contributions therefore reduce the company's taxable result. A dividend is different. It is paid out of capital already in the company after corporation tax, and the company gets no deduction for it. In 2026 corporation tax is 22%. A taxable share dividend to a personal shareholder is taxed at 37.84% after shielding, because the amount is multiplied by 1.72 before 22% tax is calculated.

What NOK 100,000 becomes through a dividend

A profit of NOK 100,000 taxed first in the company and then distributed in full to a personal owner gives, ignoring shielding, roughly: NOK 22,000 corporation tax NOK 78,000 available for a dividend NOK 29,515 personal dividend tax NOK 48,485 net privately The total tax burden is around 51.5%.

Salary costs employer's contributions – but builds rights

Salary has a cost a dividend does not: employer's national insurance contributions. In zone I the rate is 14.1% in 2026, while other zones have lower rates – see Employer's national insurance contributions. For the owner, salary is taxed through 22% tax on general income after deductions, national insurance contributions and progressive bracket tax. In return, salary can build entitlement to sick pay, parental benefit and retirement pension where the other conditions are met. A dividend does not. For an owner who is the only employee of their own company, that is often the strongest argument – not the tax rate. More on the pension side is in Pension for the self-employed

A simplified example with NOK 500,000 available

Assume the company has NOK 500,000 available – either for salary with employer's contributions, or as profit to be distributed later – and that the company is in zone I. The whole amount as salary: gross salary is about NOK 438,200 and the employer's contributions about NOK 61,800. With standard deductions and no other income, the net privately is in the range of NOK 330,000–350,000, depending on the personal and minimum deductions and where the bracket tax bites. The whole amount as a dividend: corporation tax NOK 110,000, dividend NOK 390,000, dividend tax before shielding about NOK 147,600 – net privately about NOK 242,400. In this simplified example salary gives a clearly higher net figure. Salary is still not always best. The example ignores holiday pay, occupational pension, occupational injury insurance and other employer costs, all of which reduce how much gross salary the budget actually covers.

6 G is not a tax-optimal salary

A common piece of advice is to take salary up to 6 G and the rest as a dividend. 6 G matters because several NAV benefits are capped there, but it is not a tax threshold. Nothing in the tax rules changes at 6 G. From 1 May 2026 G is NOK 136,549, and 6 G is NOK 819,294. Pension accrual in the National Insurance scheme can at the same time continue up to 7.1 times the average G – a different figure from 6 G. Whether more salary is favourable depends on other employment income, the employer's contribution zone, bracket tax, holiday pay and pension costs, the NAV basis you want and the company's capital needs. If you already have a high salary from another employer, further salary from your own company hits a high marginal rate immediately. A dividend then becomes relatively more attractive.

You do not have to take a market salary before taking a dividend

This misunderstanding is remarkably persistent. A working shareholder can normally choose a low salary, no salary or a high salary. A dividend is not automatically reclassified as salary simply because the owner has worked hard and taken little pay. The opposite can be a problem: a very high «salary» without corresponding work can, depending on the circumstances, be treated as a dividend.

A loan is not a tax-free third route

A loan from the company to a personal shareholder is as a general rule treated for tax purposes as a dividend – even where it is a genuine loan under private law, with a promissory note and interest. You can end up with the tax without having received the money as your own. The rules, and the narrow exception for small short-term credits, are in Loans from your own company

The combination is often best

For many owners the most robust model is mixed: salary that gives the private cash and the work-based rights you want, dividends once further salary carries a high marginal cost, and capital left in the company where it is to be reinvested. Where the capital is to be reinvested in the corporate sector, a holding company is also relevant. Where it is to be invested privately in listed shares, a share savings account is often simpler. Greenleaf can model salary, employer's contributions, personal tax and dividend tax side by side and show what different levels mean for both your private net and the company's cash position.

This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.

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