Taxation of dividends 2020
The partners of companies have the frequent doubt of how to make the TAXATION of DIVIDENDS of an SL, since they are declared in the Corporate Tax and, in addition, when they go out of the company to the partner’s patrimony they must be declared in the IRPF (Personal Income Tax).
In addition, the partners can apply the deduction for double internal taxation of dividends, that comes to avoid the double taxation of the profits, as we commented at the beginning, by the society first and in the person of the partner second.
On the other hand, if the individual is not related to the company, the dividends are taxed as income from movable capital in the savings taxable base, at 21% up to 6,000 euros, 25% from 6,000 to 24,000 euros and 27% from that figure.
On the other hand, we remind you that dividends are subject to a 21% withholding tax, although those distributed by holding companies to individuals who are IRPF taxpayers will not be subject to income on account or withholding tax.
These deductions try to alleviate the existence of double taxation that occurs when the profits generated in a company, after being taxed by the IS, are taxed again in the person of the partner (in the IRPF if the partner is an individual, or in the IS if the partner is a legal entity), either due to the receipt of a dividend, or as a reason for the transfer of the shareholding.
Deduction for double taxation of dividends
It is the shareholders who must approve the distribution of profits, at the proposal of the Board of Directors, by means of a resolution at the General Meeting, agreeing on the form of payment and the time at which it is to be made.
Dividends are paid out of current or accumulated profits and are distributed in proportion to the shareholder’s interest in the capital stock. However, if another type of distribution is agreed upon in the bylaws, the provisions of the bylaws must be followed.
Sometimes, the company delivers dividends to its partners before the approval of the annual accounts. This is known as an interim dividend and will be deducted at the time of payment of the dividend resulting from the distribution of profits.
The withholding must be declared at the time the dividend is payable. If nothing is stated in the General Meeting regarding the date of collection of the dividends, it is understood that the dividend is payable as of the day following the Meeting that resolves the distribution.
Taxation of dividends in Spain
Since personal income tax is taxed progressively and personal and family circumstances are taken into consideration, it is necessary to determine the taxable income for corporate income tax purposes. The personal income tax rates are as follows depending on the taxable income:
However, the withdrawal of money from a company is taxed as a dividend in the income tax return at 18% (19% from 6,000 euros) and to finish squaring the circle, the company must pay us a salary as administrators within the work of direction and management of the company.
To constitute a society has some expenses, approximately 700 euros and requires at the same time greater documentary and formal obligations. If we are not very well versed in fiscal matters, we must entrust the tasks of management of the company to a good adviser. Therefore, as a general rule, at the level of advisors, the limit of fiscal balance is fixed at 50,000 euros of taxable base in the IRPF. If in our income tax return the taxable base is higher than 50,000 euros, it is interesting to incorporate a company, for lower figures it is not worth it.
Dividends pay taxes
It is the one in which the individuals, also known as partners or shareholders that are part of a legal entity, obtain income derived from the profits they generate, called dividends, earnings or profits. Therefore, if you obtained this type of income, you are in this regime.
As an individual you will be able to consider in your annual tax return personal deductions such as medical, hospital and dental expenses, interest on mortgage loans, professional psychology and nutrition services, among others. And if you obtain a balance in favor, you can request a refund.
What is the factor that individuals must apply to the amount of dividends or profits received, when they choose to credit in their annual tax return, the tax paid by the company for the distribution thereof?
What is the factor that individuals must apply to the amount of dividends or profits received, when they choose to credit in their annual tax return, the tax paid by the company for the distribution of such dividends or profits?