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Banco Santander, S.A. Message Board

  • madmax_194752 madmax_194752 Mar 28, 2013 9:01 AM Flag

    tax on dividend

    I was looking at buying shares at this low price
    But I saw that Spain has a 19% tax on dividends
    Is this correct??

    thanks in advance

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    • Max

      Your IRA is exempt from US tax, NOT Spanish tax.

      Having said that, if you take the dividend in cash, the Spanish government will take a 21% (not 19%) withholding tax, and the net will be paid into your IRA. IF you take the dividend as additional shares, there is no Spanish tax. If you don't give your broker instructions to the contrary, you will receive the additional shares tax free. You can instruct your broker to pay the dividend in cash, and subject it to the Spanish tax if you want.
      There is a third choice, and that is to take the dividend in additional shares, and instruct your broker to sell them right away. This option is also exempt from Spanish tax.

      Sentiment: Buy

    • mercerj Mar 30, 2013 8:48 PM Flag


      You can tell your broker to sell your rights to the divvy. This is commission free (at least w/ schwab).
      You pay US taxes.

      Good luck


      Sentiment: Buy

    • You can pay the 21% tax and receive cash OR receive extra shares !

      I estimate in 2 weeks you will get 1 new share for every 35 you hold, TAX FREE...

      • 3 Replies to g7game
      • Well with Cyprus issue calming down, it unfortunately looks like the share price will increase in the next two weeks, maybe back up to 5.5 euros.

        This means that if the average in the second week of april is
        1) above 5.40 we get an extra share per 37 owned
        2) above 5.55 we get an extra share per 38 owned
        3) above 5.70 we get an extra share per 39 owned.

        Let's hope the share price stays low.

        good luck :)

        Santander earned/will earn net (rounded to the nearest billion euros)

        8 bn euros in 2006
        9 bn euros in 2007
        9 bn euros in 2008
        9 bn euros in 2009
        8 bn euros in 2010
        5 bn euros in 2011
        2 bn euros in 2012

        6 bn euros in 2013
        9 bn euros in 2014
        12 bn euros in 2015.

        assuming 80% take shares as the dividend, and the dividend remains at 0.60euros per share, and the share price stays around 6 euros, and they keep paying the dividend in scrip form.
        These assumptions mean that the number of shares will rise by 0.85bn in 2012 and by 1bn in 2015.
        Number of shares year end
        2012 = 10.50 bn
        2013 = 11.35 bn
        2014 = 12.25 bn
        2015 = 13.25 bn

        so net earnings per share in 2015 will be 0.90 euros.

        Also keep in mind that the bank is already end 2012 significantly larger than in 2008. A growth story !

        So based on the assumptions made, a shareholder taking scrip shares, will have roughly an extra 10 shares per 100 owned per year.
        So end 2015 an extra 33 per 100 owned from end 2012.

        If the share should THEN adjust upwards to a P/E of 10, it would mean a share price of 9 euros.

        So going from 100 shares @ 6 euros to 133 shares @ 9 euros
        600 euros to 1197 euros. So a return of 100% in 3 years.

      • Not tax free, tax deferred until you sell the shares. After sale of dividend shares, then you pay the taxes.

      • thanks sir

        Do we get a divi tax each quarter also?? Is my IRA exempt?
        Myshares are in my IRA
        Thanks again