Introduction: Dividend Tax in Spain Explained
If you’re earning dividends from Spanish companies, or you’re a foreign investor, it’s crucial to understand how Spain taxes dividends. Spain applies withholding tax, and double tax treaties may offer relief.
At Borderless Lawyers, we help investors and shareholders minimize tax exposure and comply with Spanish tax law.
🏦 What Are Dividends?
Dividends are profits distributed by a company to its shareholders. In Spain, they are taxed as part of savings income and are subject to withholding tax at source.
📌 Spanish companies must withhold dividend tax before payment to shareholders.
💸 Dividend Tax Rates in Spain
✅ For Spanish Tax Residents:
As of current rules, progressive tax rates apply:
| Dividend Amount (EUR) | Tax Rate |
|---|---|
| Up to €6,000 | 19% |
| €6,001 – €50,000 | 21% |
| €50,001 – €200,000 | 23% |
| Over €200,000 | 27% |
🔍 These are personal income tax (IRPF) rates applied to savings income, which includes dividends.
🌍 For Non-Residents:
Non-resident shareholders are typically subject to a withholding tax of 19% on gross dividends received from Spanish companies.
However:
✅ Double Taxation Treaties (DTTs) between Spain and many countries can reduce this rate (e.g., to 5% or 15%)
❌ Without a DTT, or if not properly claimed, the full 19% rate applies
📄 To benefit from treaty relief, non-residents must submit Form 210 and residency certification.
🌐 Double Taxation Treaties (Examples)
| Country | DTT Rate (Typical) |
|---|---|
| Germany | 5% or 15% |
| USA | 15% |
| UK | 10% or 15% |
| France | 0% or 15% |
| Australia | 15% |
| UAE | 0% |
📎 Rates depend on ownership structure and conditions in the treaty. Legal guidance is recommended to apply lower rates correctly.
🧮 Spanish Company Withholding Duties
Spanish companies paying dividends must:
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Withhold the applicable tax rate
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Declare withholding to the Spanish tax office (AEAT) using Form 123
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Provide a certificate of dividends paid and tax withheld to shareholders
✅ Corporate bookkeeping and compliance is mandatory — errors can lead to fines or liability.
🛡️ Dividend Tax Planning & Exemptions
✔️ EU Parent-Subsidiary Exemption:
No tax is withheld if:
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The parent company holds at least 5% of shares
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Both entities are EU tax-resident and meet substance criteria
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Proper documentation is submitted (Form 210, exemption claim)
🔍 Holding Companies:
Using Spanish holding entities (ETVEs) can offer favorable tax treatment on outbound dividends to non-resident investors.
💼 Planning ahead with a tax lawyer can optimize your dividend flows.
💬 Real-World Case
Case: A UK investor owned 10% of a Spanish tech startup. He received €15,000 in dividends annually. By applying the UK–Spain treaty and filing Form 210, we reduced his withholding tax from 19% to 10%, recovering over €1,350 per year.
⚖️ Legal & Tax Compliance Tips
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Non-residents must file taxes within 1 month of dividend receipt if claiming treaty benefits
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Always request a tax residency certificate from your home country
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Spanish companies should keep detailed dividend ledgers
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Seek advice on profit distribution timing, especially for tax year-end optimization
📌 Failure to claim exemptions or file correctly can result in double taxation
👩⚖️ How Borderless Lawyers Can Help
We provide:
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📊 Tax optimization for foreign shareholders
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📄 Form 210 preparation and DTT applications
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🏢 Company support on dividend withholding compliance
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🌍 Cross-border investment structuring
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💰 Reclaiming overpaid Spanish dividend taxes
📞 Get Tax-Efficient Dividend Advice in Spain
Planning to receive or distribute dividends in Spain? Whether you’re a private investor or company director, Borderless Lawyers ensures your tax planning is legally compliant and financially smart.