Taxation of profit sharing

fiscalidad compraventa empresas

How taxable profits or dividends to members?

The question is often raised about the less burdensome way to enter the profits generated by a corporation.
This article begins a series on taxation and sale of businesses, where we taxation of profit sharing, of la Sale of shares and capital reduction, and comparison among alternatives.

In any case, should be aware that the tax regulation changes frequently and that given the importance of these issues, strongly we recommend that you take advice from a professional.

Today we discussed the taxation of profit sharing.

The dividend

It is regulated by the Law on Corporations Articles 273 a 278. The dividend is decided in the Shareholders' Meeting. However, one must keep in mind that It is required to be allocated to the reserves 10% the profit earned, until they reach a minimum of 20% share capital (article 274 of the Corporations Act). From this requirement be covered, the partners may decide the fate of those benefits. A different issue is the right of members to receive remuneration from the company when you get benefits, but this is a topic for other inputs.

Taxation of dividends

The profit-sharing scheme was amended by the Tax Reform 2015.
Dividends received by the partner will be taxed as income from capital in the savings tax base, on Income Tax of Individuals (Income Tax).

Before the reform, They were exempted the first 1.500 euros received as dividends. However, with reform 2015, this exemption has been deleted.
So we can distinguish between dividends received

Before the 1 January 2015

In such dividends are retained the 21% (amount which the company making the distribution must enter the Tax Agency).
Dividend, exempted the first 1.500 euros, namely, if we receive 2.000 euros, tributaremos only by 500 euros that exceed the minimum exemption.

The amount subject and not exempt dividend, the following scale is applied:

  • For the first 6.000 euros are taxed at 21%.
  • Of 6.000 euro up 24.000 euros are taxed at 25%.
  • The amount exceeding 24.000 euros 27%.

A partir del 1 January 2015

The company distributing the dividends shall retain the 20% (instead of the previous 21%) as payment on account of income tax.
In addition it removes the exemption of 1.500 euros that previously existed.

A dividend applies the following scaling:

  • The first 6.000 euros tributarán al 20% in 2015 and 19% in 2016.
  • Of 6.000 euro up 24.000 tributarán al 22% in 2015 and 21% in 2016.
  • The amount exceeding 50.000 euros tributará al 24% in 2015 and 23% in 2016.

We must not forget that the benefits obtained society, it will have to pay taxes on corporation tax, a general type 30%, the 25% Micro- and SME or special conditions 20% or even 15% for entrepreneurs.

An alternative may be that partners receive income by way of Salaries in the company, it would be an expense in reducing the benefit, but otherwise you must pay the appropriate fee to Social Security, so you should make concrete numbers in each case.

In upcoming posts, see alternatives to taxation on profit sharing as sale of shares or reduction of capital.

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