Tax On Dividends Spain?2024

Tax On Dividends Spain?

Tax On Dividends Spain
19% Dividends: Dividends paid to resident companies and individuals generally are subject to a 19% withholding tax.

How are dividends paid to foreign investors taxed in Spain?

Capital Gain and Dividend Taxation for Europeans

European Union (EU) – In the case of dividend distributions to EU parent companies , if these are legal entities and there is a shareholding of 5% or more , the ‘European parent-subsidiary directive’ applies and no withholding tax applies. If dividends are paid to foreign (‘non-resident’) private individuals, legal entities with an interest of less than 5% or other business forms, there is usually a withholding tax.

What are the changes to the tax system in Spain?

Another important change of the Spanish tax system is the removal of the exemption on the first EUR 1,500 of dividends. The foreign entrepreneurs who obtain dividends in Spain, but not through a permanent establishment in this country, are required to pay the dividend tax applicable at the rate of 19% starting with 2016.

What is the tax rate on capital gains in Spain?

Exclusive Tax Payments For Foreigners On Contracts – Spain has a special tax payment system for foreigners working on assignments or contracts with a Spanish company. The income tax varies with the amount of individual income. The Spanish tax rates on such are as follows:

Income of up to €600,000 pays a tax rate of 24%.
Income exceeding €600,000 pays a 47% tax rate.
3% tax rate for income above €200,000 from capital gains.

What are the different types of taxable income in Spain?

The Spanish system for direct taxation of individuals is mainly comprised of two personal income taxes: Spanish personal income tax (PIT), for individuals who are resident in Spain for tax purposes, and Spanish non-residents’ income tax (NRIT), for individuals who are not resident in Spain for tax purposes who obtain income in Spain.

Therefore, persons who obtain income in Spain are either liable to pay Spanish PIT or Spanish NRIT. Residents in Spain are generally subject to PIT on their worldwide income, regardless of where it is generated, which is taxed, following statutory reductions, at progressive rates.

Non-residents are subject to NRIT only on their Spanish-source income. There are two types of taxable income for Spanish PIT purposes: general taxable income and savings taxable income. Savings taxable income is basically composed of the following:

Dividends and other income generated from holding interests in companies.
Interest and other income generated from transferring the taxpayer’s own capital to third parties. As an exception, when capital transferred to a related company exceeds three times the latter’s equity, the interest corresponding to the excess is taxed as general taxable income.
Income generated from capitalisation transactions and life and disability income insurance.
Capital gains generated from transfers of assets.

General taxable income includes:

All income that is not savings taxable income.
Capital gains not generated from transfers of assets (such as lottery prizes).
Income allocations, attributions, or imputations, as established by law.
Interest and other income generated from transferring the taxpayer’s own capital to a related company when the capital exceeds three times the latter’s equity and for the part corresponding to the excess.

Regarding NRIT, income not obtained through a permanent establishment (PE) is taxed on each individual total or partial accrual of income subject to tax. This means that losses cannot be offset against gains. Taxable income for non-residents without a PE is generally the gross income stipulated in Spanish PIT law, and no reductions are applicable. As a special rule, in the case of provisions of services, technical assistance, installation and assembly work resulting from engineering contracts and, in general, economic activities or operations carried out in Spain without a PE, taxable income is the difference between gross income and the expenses generated by staff, or for the procurement of materials incorporated in the works and supplies, in accordance with the requirements established in the regulations implemented under Spanish NRIT law.

When calculating the net income of taxpayers without a PE that are resident in other European Union (EU) member states, a distinction is made between individuals and companies;
In each case, the tax deductible expenses are established in accordance with the PIT and CIT legislation, respectively;