Dividends in kind

Last updated: 5 August 2026.

Quick answer. Under the Spanish Corporations Act, dividends are presumed to constitute a monetary credit, but the shareholders may unanimously agree at the General Meeting to distribute dividends in kind. The articles of association may also include a clause providing for distribution in a form other than money; amending the articles falls to the General Meeting, and the Resolution of the DGRN of 30 July 2015 requires unanimity for this clause, since it affects the individual rights of all members. The assets distributed are usually shares the company holds as treasury stock, and the shareholder may be given the choice between receiving company shares or money.

The Corporations Act assumes that dividends are set up as a monetary credit.

However, it can be unanimously agreed by the partners in a General Meeting that the distribution of dividends should be made in kind.

Likewise, the articles of incorporation may include a clause that provides for the distribution of dividends in a form other than money. The competence for the modification of the statutes corresponds to the General Meeting. For the approval of such modification, the majorities established by law are necessary (articles 199, 194 and 201 Corporations Act).

In this regard, the Resolution of July 30, 2015, the DGRN (Dirección General de Registro y Notariado – General Directorate of Registry and Notaries) establishes that unanimity will be required. This is justified by the fact that the approval of this clause affects the individual rights of all members. Therefore, the consent of all of them would be necessary.

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What kind of assets can be distributed as dividends?

Usually, these are shares that the company holds as treasury stock.

It can be left to the shareholder’s discretion to receive the benefit in the form of company shares or money.

This is what is known as a scrip dividend or elective dividend. The partner may choose between acquiring the shares, selling the subscription rights, or receiving the diviend in money.

When the shares do not come from the company’s own portfolio, the corresponding increase of  capital must be approved. Normally, an increase of capital is carried out with the issuance of new shares. The amount will depend on the dividends that the company intends to distribute. It shall correspond to the amount that will be distributed through shares to the shareholders who have preferred them.

The dividend in kind could also consist of a lieu of payment. For example, the shareholder may acquire real estate owned by the company. Even the creditor may receive part of his credit in money and part in kind.

What would be the best option in terms of elective dividends?

As we have already noted, shareholders will have two options regarding elective dividends:

For shareholders who wish to increase their percentage in the capital stock, the right choice would be to acquire shares. This way they would increase their participation in the company at no cost, with the benefits that this entails.

On the other hand, those who choose to receive dividends in money, will see their participation in the company reduced. This, in the future, would imply a lower participation in dividends. And this, because the distribution of dividends is made in proportion to the partner’s participation in the capital.

What is the taxation of this dividend category?

In the case of the acquisition of dividends in the form of shares:

• As long as the shares acquired in this way are not sold, there will not be taxation for them;
• There won´t be any retention in the Personal Income Tax.

The answer to the consultation to the General Directorate of Taxes V3301-15, dated October 27, deals with the taxes that arise from receiving real estate as dividends.

As for the corporate tax, the property must be valued in accordance with its normal market value. The company must integrate the difference between the market value and its fiscal value in its taxable base.

For the Tax on Property Transfers and Documented Legal Acts, the shareholder is considered the taxable person. The acquisition of the property will be part of the taxable event in the modality of Onerous Patrimonial Transmissions.

For the purposes of Personal Income Tax, dividends are considered to be income from movable capital. They are, therefore, subject to withholdings and payments on account. Dividends in kind will be valued according to Article 43 LIRPF (Personal Income Tax Act), that is, according to their normal market value.

Finally, the company will be subject to the Tax on the Increase in Value of Urban Land. If the property is considered to be urban, the transfer for consideration will give rise to the taxable event of the referred tax.

If this article has been of interest, we also suggest you to read the following article published on our website: Distribution of Dividends

For advice applied to your case, see our Corporate practice area.

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