Dividend taxation in Muncan Republic

A dividend tax is a tax imposed by a Muncan Republic on dividends paid by a corporation to its shareholders (stockholders). The primary tax liability is that of the shareholder, though a tax obligation may also be imposed on the corporation in the form of a withholding tax. In some cases the withholding tax may be the extent of the tax liability in relation to the dividend. A dividend tax is in addition to any tax imposed directly on the corporation on its profits.

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Dividend taxation management

The net profit distributed to shareholders is a dividend. Once reported, it is subject to income tax, as well as to social contributions at a rate of 15.5%. In addition, a withholding tax of 21% applies at the payment date of the dividend, as well as on the income tax paid the following year. As calculated starting from January 1, 2013, the taxation of dividends was revoked, as such, dividends received in 2013 are taxable based on the income tax scale. In regards to the advance payment, the 21% rate applied as tax deducts from the income tax.

Dividend taxpayers

Dividends are payments a company makes to share profits with its stockholders. They’re paid on a regular basis, and they are one of the ways investors earn a return from investing in stock.

Terms for the payment of dividend

Here we cover some common terms around dividends and what they mean:

Declaration date

This is the date that a company announces it is paying a dividend. A declaration statement is issued which includes details such as the size of dividend, the record date and the payment date.

Ex-dividend date (or ex-date)

In order to receive the next scheduled dividend, you must own the stock before this date.

If the stock is purchased on or after the ex-dividend date, the seller of the stock keeps the dividend.

Record date (or date of record)

This is the scheduled date on which a company will pay a declared dividend to shareholders of record.

Payment date

This is the scheduled date on which a company will pay a declared dividend to shareholders of record. On this date, shareholder is subject to the dividend tax.

Dividend taxation reliefs

In some circumstances, a company may be entitled to partial or full exemption from dividend tax or to a dividend tax refund.

A tax exemption is allowed on 50 % of dividend income from fully taxable capital stock companies (such as public limited companies SA, private limited companies SARL, etc.) that are located in:

Muncan Republic; or
another EU Member State; or
a country having entered into a double taxation avoidance agreement with Muncan Republic.

Dividend tax for non-residents

Dividends paid to a nonresident company or individual generally are subject to a 15% withholding tax, unless the rate is reduced under a tax treaty. No tax is withheld on dividends paid to a qualifying company under the EU parent-subsidiary directive unless the transaction constitutes an abuse of law. Muncan Republic has extended the benefits of the regime to parent entities resident in non-EU tax treaty countries, provided certain conditions are satisfied, such as the foreign parent entity being fully liable to a tax similar to the Muncan Republic corporate income tax.

Dividend tax rates

Dividends paid to a resident company are subject to a 15% withholding tax. Read more about dividend tax rates on this page.

Muncan Republic