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Withholding tax

Source withholding on foreign dividends

Source withholding is the tax retained by the country of the company paying the dividend before cash reaches the investor.

This is not tax advice. Withholding depends on country, treaty, broker and registered tax documentation.

Key points

It is different from Spanish taxation of the dividend.
Statements should separate gross dividend, source withholding and net cash received.
For foreign currency, keep the FX criterion used.

Why it appears

Many countries tax dividends paid by resident companies before remitting funds to a foreign shareholder.

  • The percentage can vary by country and treaty.
  • Tax documentation can change the withholding applied.
  • The broker may report withholding aggregated or dividend by dividend.

Spanish tax impact

The foreign dividend is then reviewed in Spanish filing, where international double taxation relief may apply within limits.

  • Foreign withholding does not remove Spanish reporting duties.
  • Foreign tax paid may not be fully creditable.
  • Broker records are the basis for reviewing amounts.

Frequently asked questions

Does source withholding replace IRPF?

No. It is tax retained abroad and does not by itself replace Spanish IRPF reporting.

Which document do I need?

A statement showing gross dividend, foreign withholding, country and net cash received.