Tax law and stock market

Introduction to Spanish Stock Market Taxation

The most important part of investing in the stock market is to maximize profits, and this can be achieved only taking into consideration the tax liabilities arising from the ownership and trade of the different stock market products.Stock (or shares) represent a percentage of ownership of the capital of a certain company and usually grant vote rights and other privileges. The main effect of the possession of shares is the right for their owner to participate to the company’s profits (or dividends).In Spain both ownership and transmission of stock market products are taxed.

Purchase and sale of stock

The operation of purchase and sale of shares or similar products has to be included in the annual tax return (Declaration de la Renta). The benefit obtained through this operation, which is represented by the profit achieved by selling the shares at a higher price than the one originally paid, is considered a capital gain (ganancia patrimonial).Capital gain, is therefore, any profit generated from the sale of a stock market product.Capital gain tax rates in Spain are the following:
Capital gain201420152016
From 0 to 6.000 €21 %20 %19 %
From 6.000 to 24.000 €25 %22 %21 %
From 24.000 to 50.00027 %22 %21 %
From 50.000 € onwards27 %24 %23 %
The operation will follow the FIFO (first In First Out system), that means that if you bought and sold shares in different periods the oldest one will be considered the first to be sold.  It’s important to remember that if the sale results into a loss no tax will be due since no profit is made.The purchase and sale of stock is VAT exempt.

Tax on Dividends

Perception of dividends is the direct consequence of the ownership of shares.  The retribution can be received in money, new shares or options and special rights on shares to be emitted.Dividends have to be included in the tax return, under the special category of savings. Since 2015 the old exemption for the first 1.500 Euros of shares does not exist anymore, making their possession less profitable.Tax rates in the year 2016 are the following:
From 0 to 5.99919%
From 6.000€ to 50.000€21%
From 50.000€ onwards23%
Navas & Cusí Abogados, through his team of expert lawyers, offers a complete service of legal and tax advice over transactions in the stock market. It also provides representation before Spanish and European tribunals and courts for the defense of rights of the stakeholders.  
Contact us
If you prefer to contact us quickly and comfortably, you can do so directly at our contact numbers. We have several offices at your disposal: