Skip to main content
Practical Manual for Companies 2021.

Exemption on dividends and income derived from the transfer of securities representing the equity of entities

Article 65 of Law 11/2020, of December 30, on the General State Budget for the year 2021, with effect for tax periods beginning on or after January 1, 2021 that have not concluded upon the entry into force of this law (01-01-2021) and indefinite validity, introduces the following modifications in the LIS :

  1. Section Two modifies the first paragraph of letter a) of article 21.1 of the LIS and letter a) of article 21.6 of the LIS, to establish that dividends or participations in the profits of entities will be exempt when the requirement is met that the percentage of participation, direct or indirect, in the capital or in the equity of the entity is at least 5 percent, eliminating the alternative requirement that the acquisition value of the participation be greater 20 euros.

  2. In relation to the above, Section Six adds to the LIS the fortieth transitional provision to regulate a transitional regime to be applied for a period of 5 years to the shares acquired in the tax periods beginning before January 1, 2021, which had an acquisition value greater than 20 million euros, without reaching the 5 percent percentage established in article 21.1 a) of the LIS.

  3. On the other hand, Section Two adds to Article 21 of the LIS Section 10, which establishes that the amount of dividends or shares in profits of entities and the amount of positive income obtained from the transfer of a share in an entity and in the rest of the cases referred to in Article 21.3 of said Law, to which the exemption provided for therein applies , is reduced for the purposes of applying said exemption, by 5 percent as management expenses related to said shares, and Section 11, which states that the 5 percent reduction applicable to dividends or shares in profits of entities referred to in the aforementioned Section 10, will not be applied when the following circumstances occur:

    1. Dividends or profit shares are received by an entity whose net turnover in the immediately preceding tax period is less than 40 million euros, provided that said entity complies with the requirements established in letter a) of article 21.11 of the LIS.

    2. Dividends or profit shares come from an entity established after January 1, 2021, in which all of the capital or equity is held directly since its establishment.

    3. Dividends or profit shares are received in the tax periods that end in the 3 years immediately following the year of incorporation of the entity that distributes them.

  4. Finally, section Four adds a paragraph at the end of article 64 of the LIS which establishes that the amounts that must be included in the individual tax bases by application of the provisions of article 21.10 of the LIS will not be subject to elimination.