Taxation of dividends in income tax 2.014

Taxation of dividends in income tax 2014As you already know, tax optimization is one of the keys to get the best possible return on your savings. After last week's article where I talked about the taxation of sharesI am going to continue my taxation lessons with a summary of the taxation of dividends in personal income tax in 2.014 with the explanation of the requirements for the exemption of 1.500 euros.

What are dividends?

As most of you already know, dividends are payments that a company makes to its shareholders as consideration for the capital invested based on the distribution of the profits obtained in this year or in previous years. The most common is that they are carried out with cash, although they can also consist of the distribution of shares.

Taxation of cash dividends

Dividends are taxed as income from movable capital, as is the case with interest on bank accounts or insurance.

Dividends are taxed according to their amount:

  • At 21%, up to 6.000 euros
  • At 25%, between 6.000 and 24.000 euros
  • At 27%, from 24.000 euros

Taxation of dividends in foreign currencies

In the event that we must pay for dividends in foreign currencies, the reference value that we must take will be that of the exchange rate of the currency on the day on which the dividend payment was made.

Exemption of € 1.500 per year for dividends

Dividends are exempt up to a limit of 1.500 euros per year. This also includes premiums for attendance at meetings and profit shares of any type of entity.

This exemption has two exceptions:

  • Dividends and profits distributed by collective investment institutions.
  • Those that come from securities or shares acquired within the two months prior to the date of distribution of the dividend when, after this date, within the same period, there is a transfer of securities of the same class.

Tributación de los “script dividends”

Script dividends are dividends that are paid to the shareholder in shares instead of making a monetary payment. In this case, it is not taxed until the sale of the shares that we receive in the dividend script.