How to Distribute Dividends?

When Can I Distribute Dividends?

Dividends can only be distributed after we prepare and submit the annual report, and only if the annual report shows profit and dividends were declared by the business owners.

Once the annual report is submitted, dividends can be distributed up to the maximum specified.

How many taxes do we pay?

After distributing dividends, the company pays 20% of gross, which is equivalent to 25% net.

For example, if the company distributes 5,000 euros, it will need to pay 1,250€ in its tax report (TSD) for the following month. These 1,250€ represent 25% of the net (5000x25/100) or 20% of the gross (the gross is the sum of the net, 5000, plus the taxes, 1250, which is 20% of 6,250€, and they have been paid in taxes).

Who Receives Dividends?

They must be distributed equally to the shareholders (not the board members). So, for example, if a company has two shareholders, John, 20% of shares, and Anne, 80%, and the business distributes 5000 euros in dividends, 1000€ will go to John, and 4000€ will go to Anne.

How to Distribute Them?

The distribution must be made from the corporate bank account to an account owned directly by the shareholder (not another company or another person) by that amount. The concept must be "dividends payment."

The dividends can be distributed once, only after the annual report is submitted, and if the result of the annual report was profit (not losses). For example, let's suppose that the previous company has 5000 euros in profit after the annual report. In that case, it can distribute initially up to 5000 euros after the annual report is submitted (1000 will go to John and 4000 to Anne).

Updated on: 25/09/2023