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V1024-15 30 March 2015 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimiento del capital mobiliario

Dividends from limited companies taxed as capital gains

An investor enquiring about dividend withholding and double taxation relief is advised that dividends are capital gains subject to retention, and double taxation relief no longer exists.

The question raised

In the event that, following the acquisition of said holdings, the company agreed on a distribution of dividends charged to reserves generated prior to the acquisition, the amounts obtained would be subject to withholding under Personal Income Tax (IRPF). Application of the deduction for double taxation of dividends.

The DGT's ruling

Dividends are considered income from movable capital pursuant to Article 25.1.a) of the Personal Income Tax Law (LIRPF) and are subject to withholding and payment on account. The withholding base is the full consideration, without considering the exemption under Article 7.y). The deduction for double taxation of dividends is not applicable, as it has not been provided for in the Law since 2007.

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