Personal income tax on dividends in 2020-2021 - rate, BCC, etc.

A limited liability company is a commercial entity created to make a profit. LLC participants can receive their share of income from the business only after making a decision on the distribution of profits and withholding taxes. What is the tax on dividends in 2021? The tax rate on dividends in 2021 depends on which category the participant belongs to (individual or legal entity), and on several other important criteria, which we will consider further.

Are dividends taxable?

Due to the fact that dividends are one of the types of income, their amount is subject to tax. However, the amount of tax on dividends depends on a number of factors. First of all, what category the payer belongs to: an individual or a legal entity plays a role. Also of great importance is the fact of whether the payer is a resident of the Russian Federation.

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Dividend tax for individuals in 2021

The last increase in the dividend tax rate took place in 2015. Currently, for individuals, the tax rate on dividends is:

• 13% for residents;
• 15% for non-residents.

One should not confuse the status of a resident of a country with the citizenship one has. It should be remembered that the status of a resident of the Russian Federation is assigned provided that the person has been on its territory for a total of at least 183 calendar days over the past year. It is important to note that the total count also includes days spent abroad for a valid reason (for example, due to the need for treatment or training). Therefore, a foreign citizen can also be a resident.

Dividend tax for legal entities in 2021

A participant in a limited liability company can be not only an individual, but also a legal entity (Russian or foreign company). Taxation of dividends paid by legal entities in 2021 is carried out according to the standards established by Article 284 of the Tax Code of the Russian Federation.

As we can see, if a Russian organization has at least 50% in the authorized capital of another Russian company, then no income tax is levied on dividends received (zero rate). To confirm this benefit, the participant-legal entity must submit to the inspection documents confirming the right to a share in the capital of the organization paying the income.

Such documents may be:

• contract of sale or exchange;
• decisions to divide, spin off or convert;
• court decisions;
• agreement on establishment;
• deeds of transfer, etc.

Income tax on dividends in 2021 is also established for legal entities that operate under special regimes (USN, Unified Agricultural Tax, UTII). In relation to the income they receive from their activities, such legal entities do not pay income tax. However, exceptions are made for income received from participation in other organizations:

• for companies using the simplified tax system, the provisions of paragraph 2 of Article 346.11 of the Tax Code of the Russian Federation apply;
• For companies on the Unified Agricultural Tax, the norms of paragraph 3 of Article 346.1 of the Tax Code of the Russian Federation apply.

These articles explicitly state that the special tax regime does not apply to profits received from participation in other enterprises. As for companies on UTII, although there is no such direct clause, the exemption from income tax applies only to income received from the types of activities specified in Article 346.26 of the Tax Code of the Russian Federation.

Thus, the tax on dividends of a legal entity for 2021 is paid in the form of income tax (at the rates indicated in the table), even if, in general, a company under a special regime is exempt from paying this tax.

As in the case of an individual participant, the tax agent obligated to withhold and remit income tax is the organization that paid the dividends. The tax payment deadline is no later than the day following the day of payment (Article 287 of the Tax Code of the Russian Federation).

How to pay tax on dividends

Responsibility for transferring the required taxes from the amount of dividends to the budget lies with the company itself. In other words, persons who are among the founders receive dividends after their taxation has been carried out. Thus, if this type of income is paid in cash, then the organization itself acts as a tax agent.

If dividends are not paid in cash

Special attention should be paid to the consideration of the situation when the payment of dividends occurs in a different form (for example, as a transfer of fixed assets, goods or any other property). Under such circumstances, the organization must notify the tax office of the impossibility of making the required payments, after which the responsibility to pay taxes on dividends of individuals passes to the citizen himself. Their repayment occurs as follows: at the end of the reporting period, you must submit a tax return in Form 3-NDFL and make the corresponding payment to the budget yourself. It should be borne in mind that receiving dividends in the form of property is further complicated by the fact that tax officials consider it as a sale of goods, as a result of which the taxable value is calculated based on which taxation system the company adheres to. In the event that the adopted system imposes obligations to pay additional tax on sales due to a transaction for the transfer of property, double taxation occurs. Even if the case is brought to court, the latter do not always recognize the lack of implementation process, so such situations are best avoided if possible.

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Personal income tax agents

Individuals only rarely pay their taxes themselves. Usually tax agents do this for them: organizations and entrepreneurs. Also, the functions of tax agents for personal income tax are performed by:

• private notaries;
• lawyers who have established law offices;
• separate divisions of foreign organizations paying income to individuals;
• organizations paying remuneration to military and civilian employees in the Russian Armed Forces.

What does the law require from tax agents? Calculate, withhold and transfer personal income tax on income paid to individuals to the state budget (clause 1, article 24, clause 1, 7.1, article 226 of the Tax Code of the Russian Federation). In this article, we will talk about the timing of transferring personal income tax on dividends.

Taxes on share dividends

The tax rate depends on the status of the investor:

• individual or company;
• resident or foreign citizen (company).

If dividends from US stocks

All US stocks are purchased exclusively through brokers. Taxes are paid in two ways:

• when US shares are purchased on a Russian stock exchange - in this case, the broker will be responsible for accruals and payments;
• if the shares were purchased through an American broker, taxes on dividends on US shares will have to be paid by the investor himself.

To avoid double taxation, you need to use a special form and withhold 10%. If they were withheld, then all that remains is to pay the remaining 3% to the budget. If a person invests in US companies, then he must sign Form W-8BEN. This paper will confirm that the person is not a US citizen, so he will not have to pay 30%.

They pay taxes once a year. To do this, the investor fills out a declaration and sends it to the Federal Tax Service. This must be done at the place of registration.

Taxes on dividends on shares of Russian companies are 13% of the amount of dividends received. A foreign company pays 15% if it buys Russian shares.

Details for paying personal income tax on dividends

The organization transfers personal income tax at the place of its registration. The details for payment are similar to the payment of personal income tax when deducted from wages. Personal income tax on dividends in 2021 is paid to KBK 182 1 01 02010 01 1000 110.

Sample payment order for personal income tax on dividends, the payment deadline for which is 04/07/2020.

If the final deadline for payment of personal income tax on dividends in 2021 falls on a weekend, payment must be made on the first working day after the weekend.

When making a payment, errors are possible, for example in the KBK, which can lead to arrears, penalties and fines. Late payment is subject to a fine of 20% of the amount. The way out of this situation is to clarify the payment order using a statement. In it - on the basis of paragraphs. 7 and 8 art. 45 of the Tax Code of the Russian Federation - we ask you to make a decision on clarification. We indicate the date and number of the payment order, the payment amount and type of tax, as well as information about the incorrect details in the payment order and the correct KBK data (or other incorrect information). We emphasize that this error did not result in non-transfer of tax to the budget. We attach a copy of the payment order to the application, which we verify.

Tax on dividends on IIS

Using an individual account entitles clients to receive tax benefits. There are two options by which you can receive preferential conditions:

• Option A. You can get a tax deduction - 13% of the amount that was deposited into the account. There is a maximum deduction to which the client is entitled, this is 52,000 rubles. The option is suitable only for people who have an official income, from which 13% is calculated.
• Option B. You don’t have to pay interest on the income received.

In total, an IIS can be opened for 3 years. You can invest a maximum of 1 million rubles annually. In this case, the shareholder can sell the securities at any time and withdraw all invested funds. But if the investor closes the account early, then he loses the right to receive a tax benefit for the past period. All profits that were received during the open period will be subject to a tax rate of 13%.

Registration of dividend payments, what interest rate is applied when calculating personal income tax

The decision to pay dividends is made at the general meeting of shareholders of the company and is documented in the appropriate minutes. Attached to this document is a list of persons who have the right to receive a portion of the profit after its distribution.

The JSC protocol contains the following information:

• date, time and place of the meeting;
• Full name of the chairman and secretary of the meeting;
• the total number of votes of shareholders and the number of votes of meeting participants;
• a list of issues on the agenda and decisions taken on them.

The protocol indicates how much of the company's net profit will be used for payments, and the amount of dividends per share (it cannot be higher than the level recommended by the Board of Directors). The amount of payments for each investor is determined later. The calculation is made in accordance with the number of securities owned by a particular shareholder.

The amount of the liability is withheld by the tax agent immediately upon payment of dividends. To calculate its size, the following rates are applied:

• for residents of the Russian Federation - 13%;
• for non-residents of the Russian Federation - 15%.

According to the current legislation of the Russian Federation, a resident of the country is considered to be a citizen of Russia or a citizen of any foreign state who lives on the territory of the Russian Federation for a total of at least 183 days a year. If the taxpayer status changes during the year, when calculating personal income tax, the one that was in effect at the time of payment of dividends is taken into account.

Procedure for calculating personal income tax on dividends to residents

The calculation of personal income tax on payments to residents will depend on whether the organization making the payments received the same type of payments from other companies.

For example, the organization has no income in the form of dividends. In this case, the calculation procedure will be as follows:

Personal income tax = D x 13%, where

D – dividends accrued to the resident.

13% – tax rate.

The calculation will be more complicated if the organization is the founder of another company from which it received any amounts for participation in the current or previous year. To calculate the tax, you will have to check whether dividends received from another company were taken into account in payments to the founders or not. If such receipts have already been taken into account in the calculations, then personal income tax must be calculated as usual, that is, the payment is multiplied by 13%. If income from another company has been received, but dividends have not yet been paid, the calculation will be as follows:

Personal income tax = DPR / DR x DR – DP x 13%, where

DNR – dividends that are accrued;

DR – dividends to be distributed;

DP – dividends received, excluding amounts taxed at a 0% rate.

It should be remembered that you will not need to withhold personal income tax if the dividends received by the company are equal to or greater than the amount paid to the participants.

Procedure for calculating personal income tax on dividends to non-residents

For non-residents, the formula for calculating personal income tax will differ only in the size of the rate:

Personal income tax = D x 15%

How are taxes on dividends calculated?

In accordance with the norms of the Tax Code (clause 5, article 275), taxation on dividend payments is calculated using a special formula: H = D/D1*Sn *(D1 – D2). Explanation:

1. N – amount of withheld tax payment.
2. D – dividends due to the LLC participant.
3. D 1 – the total amount of income from profit to be paid to all participants of the company.
4. Сн – tax rate.
5. D 2 – the amount of dividend payments received by the company that transferred income from profits. They accumulate dividends that are not subject to profit tax at a zero rate and were not previously taken into account when calculating taxes on profits paid by the LLC.

The financial resources received by the organizations to which they are due are defined as non-operating income. The tax has already been removed from them.

Is it possible to get a tax deduction on dividends?

A tax deduction is an amount by which the tax base can be reduced if there are legal grounds for doing so. Citizens who pay personal income tax at a rate of 13% are entitled to receive this benefit in Russia.

Dividends paid to investors are also subject to income tax at a basic rate of 13%. According to the law, fulfilling this condition presupposes the possibility of obtaining a tax deduction. But paragraph 3 of Art. 210 of the Tax Code of the Russian Federation determines that this benefit does not apply to income received as a result of equity participation in the company’s business. Therefore, no tax deduction is applied to dividends.

How to reflect 2-NDFL in the certificate

In addition to dividends, the income certificate includes all information about an individual’s income for the past year and tax amounts for a given period. How to reflect dividends on the income statement?

These data are reflected according to the established code of this income 1010. It was also used previously.

EXAMPLE

At the end of 2021, it was decided to pay dividends. However, until January 1, 2021, the corresponding amounts were not credited to the recipients’ accounts.

In this situation, the 2-NDFL certificate for 2021 will be without dividends. Income from them must be shown in the certificate for the period when the dividends were actually paid. That is already for 2018.

In addition, the total amounts of dividends paid and personal income tax taken from them must be reflected in the quarterly calculation in form 6-NDFL.

For more information about this, see “Dividends in 6-NDFL: filling out a sample calculation.”

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17.06.2019

What is personal income tax

The deciphering of the abbreviation personal income tax is simple: personal income tax. This is an income withholding in favor of the state. Calculated from the income of individuals – residents and non-residents of the Russian Federation.

Let me remind you: a person who has been in our country for at least 183 days a year is a resident. Less than this period - a non-resident, even if he is a citizen of the Russian Federation. The resident must calculate and pay tax to the state on income received in Russia and abroad. A non-resident pays only from earnings in our country.

Fiscal payments must be calculated in accordance with Article 23 of the Tax Code of the Russian Federation. Non-taxable income, amounts excluded from taxable income, benefits, refunds, income tax deductions are described in detail in the code.

Who calculates personal income tax

The broker-tax agent is required to calculate and transfer the tax to the fiscal authorities. The personal income tax amount is withheld from investment income the next day after payment.

It is prohibited for a tax agent to pay income withholdings at his own expense, even if an error occurred in the calculations and the withholdings were not made or were not made in full. The responsibility to pay the missing amount is transferred to the recipient of the income.

Personal income tax on transactions with foreign brokers must be calculated independently in the 3-NDFL declaration.

The accounting department of the enterprise reports for dividends received from participation in its own LLC. The founder is an individual; he does not need to make calculations on his own.