SOCIMI and Scrip Dividend: Distribution Requirement According to the Spanish Tax Authority (DGT)

Why Does the Scrip Dividend Not Meet the Distribution Requirement in SOCIMIs?

According to the binding consultation V1576-24, dated June 26 of the General Directorate of Taxes, the possibility that the payment by means of a scrip dividend (consisting of receiving a dividend in the form of new shares instead of in cash) satisfies the mandatory requirement of distributing results in SOCIMIs is rejected, since, in order to comply with this obligation, the distribution must be made in cash.

The reasoning they have used is that the delivery of fully paid-up shares to individual shareholders resident in Spain in the context of a scrip dividend does not generate (in accordance with the provisions of article 37.1.a) of the Personal Income Tax Law) the existence of a capital gain or any other income for the shareholder.

Therefore, the DGT concludes that this obligation with respect to SOCIMIs requires that the distribution be made in cash and eliminates the possibility that it can be satisfied through the delivery of additional shares via scrip dividend.