# Taxing Company Partners: Profit Distribution or Board Attendance Fees?

> How profit distribution (dividends) and board attendance fees (huzur hakkı) — the two main ways limited and joint-stock company partners draw income from the company — differ for tax purposes, and which fits which situation.

Source: https://sinemyavuz.com.tr/en/blog/taxing-company-partners-dividends-attendance-fees
Category: Tax Advisory
Published: 2026-09-08
Updated: 2026-09-08
Author: Sinem Yavuz, Certified Public Accountant (SMMM) — SMMM Sinem Yavuz: Finance, Accounting & Advisory Office

One of the most common questions from limited and joint-stock company partners is: "What's the most efficient way to draw money out of the company?" There are two main routes — profit distribution and board attendance fees — and their tax consequences are quite different.

## How Is Profit Distribution (Dividends) Taxed?

At the end of the fiscal year, a company can distribute its remaining profit to partners after paying corporate tax. Distributed dividends are also subject to income tax withholding. In other words, dividends are taxed in two stages — once at the company level, once at the partner level. If a partner's dividend income exceeds a certain threshold, it may also need to be declared on their annual income tax return.

## What Is a Board Attendance Fee, and How Is It Taxed?

A board attendance fee (huzur hakkı) is a payment made — by general assembly resolution — to board members of a joint-stock company, or to managers of a limited company, in return for carrying out their role. For tax purposes it's treated as wage income: the company withholds income tax and pays the net amount to the partner. For the company, unlike dividends, a board attendance fee is a deductible expense against the corporate tax base — the key difference between the two methods.

## Key Differences Between the Two

- **Tax effect for the company:** Dividends are distributed after corporate tax and aren't deductible; board attendance fees are a deductible expense against the corporate tax base.
- **Tax burden for the partner:** Dividends are subject to withholding and, above a threshold, annual declaration; board attendance fees are subject to wage withholding.
- **Prerequisite:** Dividend distribution requires distributable profit; a board attendance fee requires no profit condition, only a general assembly resolution.
- **Timing:** Dividends are usually distributed once, after the fiscal year closes; board attendance fees can be paid monthly or on another recurring basis.

## Which Is More Suitable, and When?

When the company hasn't turned a profit for the year but a partner needs a regular income, a board attendance fee offers a more flexible solution. When the company has strong profits and partners have no other wage income, dividend distribution can be more suitable. The right answer depends on the partner's total income situation, the company's cash flow, and its year-end profit projection considered together — which is why we build a calculation specific to each partner rather than applying a general formula.

## Common Mistakes in Practice

- Paying a board attendance fee by simply withdrawing funds from the company account, without a general assembly resolution
- Paying a board attendance fee directly by bank transfer instead of running it through payroll
- Forgetting to record the dividend distribution resolution in the company's notarized books or notify the trade registry

## How We Advise Partners on This

We evaluate your company's profit projection together with each partner's personal tax situation, and provide a concrete recommendation on the right mix and timing of dividends versus board attendance fees. We also manage the process of keeping general assembly resolutions and payroll records compliant.