WITHHOLDING OF DIVIDENDS PAID TO A SPANISH LIMITED COMPANY

Is it necessary to withhold on dividends paid by a Spanish limited company, when the receiver of these dividends is another Spanish company?

The answer will depend on the percentage of ownership (or the value of the participation) and the time the participations have been held in the capital of the investor.

1.  If the participations represent a percentage which is greater than 5% (or they have a value greater than €20.000.000) and they have been held in the investor’s equity, at least ONE year before the collection of dividends (or if they are going to be held for the remaining time), OR if both companies belong to a fiscal group, the dividends are NOT subject to withholding (Art. 128.4.d. LIS u. 61 RIS).
2. Otherwise, dividends are subject to 19% withholding, which must be declared using a form 123.

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