Repay Director's Loan or pay him a salary

[accsvalue]

Director of Company A is 100% shareholder and provided loan of €40,000 to the company to buy stock initially. The first year of trade is almost over with around €15k in the bank and similar projected profits. No funds have been returned to the Director yet. Are the choices as simple as the following or are there alternatives?:

1. Repay the surplus funds in Company A to the director thus reducing the director's loan from €40k to €25k. The company would be taxed at 12.5% on its profits. Director pays no tax.

2. Pay the director a salary at year end to reduce the profits of the company to zero. Director pays tax but company doesn't.

Thanks

 

[Joe_90]

Depends,

Has director any salary? You should always pay something even if it just to use up the personal credits and pay PRSI. If they already have a salary then repay loan rather than paying 31%/52% tax.

Is it a new company, could it avail of the CT exemption on start up.