Classification and tax base
Dividends and other profit distributions are income from movable capital (art. 25.1 LIRPF) and are included in the savings income base, wherever the paying company is based.
You declare the gross amount, before any foreign or Spanish withholding, less deductible administration and custody fees.
| Taxable base band | Applicable rate |
|---|---|
| Up to €6,000 | 19% |
| €6,000 to €50,000 | 21% |
| €50,000 to €200,000 | 23% |
| €200,000 to €300,000 | 27% |
| Over €300,000 | 30% |
Withholding at source and credit
If there is a treaty, the source country may only withhold up to the agreed limit. When the tax withheld exceeds it, the excess is not deductible in Spain and must be reclaimed in the source country.
The amount withheld within the treaty limit is deducted from your IRPF liability through the international double taxation credit.
1. Cuando entre las rentas del contribuyente figuren rendimientos o ganancias patrimoniales obtenidos y gravados en el extranjero, se deducirá la menor de las cantidades siguientes:
a) El importe efectivo de lo satisfecho en el extranjero por razón de un impuesto de naturaleza idéntica o análoga a este impuesto o al Impuesto sobre la Renta de no Residentes sobre dichos rendimientos o ganancias patrimoniales.
b) El resultado de aplicar el tipo medio efectivo de gravamen a la parte de base liquidable gravada en el extranjero.
In short. The credit is the lower of two amounts: the tax actually paid abroad, or the result of applying the average tax rate to the income obtained abroad.
Source: Ley 35/2006, of 28 November (BOE)
Reporting obligations
Shares held in custody abroad may require you to file Form 720 (Modelo 720) when the combined value of securities located abroad exceeds €50,000 at 31 December; in later years, only if that value has increased by more than €20,000 since the last return filed. If the investment is held through crypto-assets in custody outside Spain, the obligation is met through Form 721 (Modelo 721).
Frequently asked questions
01Are dividends from a US company taxed the same way as those from a Spanish one?
They are included in the same savings income base. The difference lies in the withholding at source and the double taxation credit.
02Can I offset dividends against capital losses?
The savings income base allows offsetting between investment income and gains, within limits: a negative balance of income from movable capital is offset against a positive balance of capital gains up to 25% of that balance, and vice versa; any remainder is carried forward to the following four years (art. 49 LIRPF).
03What documents do I need?
The custodian’s dividend certificate showing the gross amount, the tax withheld and the source country.
This guide is for general information and does not replace the analysis of a specific case. Check the legislation cited in its current wording.