Company: BCDRF
Filing Date: 2025-01-08
Form Type: 424B5
Source: 0001193125-25-003514
Chunk: 300

Company: Banco Santander, S.A.
Filing Date: 2025-01-08
Form: 424B5
Chunk 300
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 consult their tax advisors regarding compliance with the requirements for application of the aforesaid participation exemption. CIT taxpayers are subject to withholding at a rate of 19% on the full amount of the distributed profits. However, no withholding tax will apply on dividends payable to a shareholder who is entitled to apply the participation exemption regime mentioned above (and evidence so to the company paying the dividend). Such withholding tax will be deductible from the net CIT payable, and if the amount of tax withheld is greater than the amount of the net CIT payable, the taxpayer will be entitled to a refund of the excess withheld in accordance with Article 127 of the CIT Law. b) Taxation of capital gains Gains or losses arising from the sale of the ordinary shares by a shareholder that is a Spanish CIT taxpayer must be included in its taxable base. The general CIT tax rate is currently 25%. Gains arising from the sale of the ordinary shares will not be subject to withholding tax on account of CIT. However, CIT taxpayers are entitled to apply a participation exemption regime for capital gains arising on the transfer of Spanish companies shares if (i) the shareholding, directly or indirectly, amounts of at least 5% of that Spanish company provided (ii) such participation is held for at least one year prior to the transfer. 151

As from 2021, the CIT exemption for capital gains is reduced from the full exemption (100%) to a 95% exemption in most cases. In practice, this means that capital gains obtained by CIT taxpayers would be taxed at an effective 1.25% rate (general 25% CIT rate on the 5% of the capital gains). Additionally, as from 2021, the 95% exemption only applies when the shareholder has at least a direct or indirect stake of 5% and therefore, shareholders which have an acquisition value of their participation that exceeds €20 million are not entitled to the exemption (without prejudice to the application of a grandfathering regime under specific conditions). In case that more than 70% of the revenues of the company whose shares are transferred derives from dividends and capital gains deriving from the transfer of shares, the application of the Spanish participation exemption is subject to particularly complex restrictions, substantially requiring that the shareholder holds an indirect participation of at least 5% in the share capital of that company’s subsidiaries. Shareholders are urged to consult their tax advisors regarding compliance of the requirements for application of the aforesaid participation exemption. Capital gains deriving from the disposal of Banco Santander’s shares