Dividend Tax in SpainUpdated on Monday 18th April 2016
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The taxation regime in Spain has been changed starting 2015 and the rates of major taxes decreased by a few percentages for the benefit of the local and the foreign investors who are encouraged to do business in this country that was strongly affected by the financial crises and that tries to recover.
One of the most important taxes for the foreign investors is the dividend tax with rates between 21% and 27% in 2014 and between 20% and 24% in 2015. Starting 2016, the Spanish authorities announced a dividend tax between 19 and 23% which will be applied for the next years. The final tax rates are to be approved by the autonomous communities in Spain, so the foreign investors should find out the rates for their businesses directly from the authorities in the region where they are interested in doing business.
Exemption removed starting 2015
Another important change 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, will pay a dividend tax of 20% in 2015 and 19% in 2016. They were entitled to a refund of the dividend tax for the first EUR 1,500 of their dividends, measure that was applied in the last years, according to Spanish Non-Resident Income Tax Law. This refund was available for the dividends received from companies incorporated in Spain, but only for the dividends obtained by 2014.
The tax reform that came into force in January 2015 was proposed by the Spanish government in 2014, approved and then published in the Official Gazette in November 2014. The reform included the decrease of important taxes, such as dividend and corporate tax, and other major changes for the personal income tax of residents and non-residents and VAT. The corporate tax will decrease from 30% (one of the highest in Europe) to 28% in 2015 and 25% starting 2016.
If you want to find out more details about the taxation system in Spain and how to register a company in this country, you may contact our law firm in Spain.