Everything about dividends in 2021: how to calculate, distribute and pay taxes

That is, by investing in shares of a company, you actually give it your funds in exchange for the right to own a part of it and receive a portion of the company’s profits. For the opportunity to use them you receive payments from the profits.

Not all companies pay dividends. According to the law, this is not an obligation, but a business right. It all depends on the decision of the board of directors. As a rule, they are the ones who determine how much of the company's income will be allocated for payment (and in the case of ordinary shares, whether it will be allocated at all). Owners of preferred shares, unlike owners of ordinary shares, do not have the right to vote at a meeting of shareholders, but the amount of dividends on them is predetermined in the charter of the joint-stock company.

Companies that pay dividends consistently over the years and continually increase them are called dividend aristocrats. Among them are Coca-Cola, Johnson & Johnson, Procter & Gamble. In Russia, LUKOIL, Sber, MTS and others are considered such.

What are dividends

Dividends are part of the net profit that is distributed among participants and shareholders. The following are recognized as dividends (clause 1 of Article of the Tax Code of the Russian Federation):

• any income distributed in proportion to the contributions of participants or shareholders and paid from the net profit of the organization;
• income from sources abroad, if they are recognized as dividends under the laws of a foreign state;
• the difference between the income received upon leaving the organization or upon its liquidation, and: for income tax - the actually paid cost of shares, interests or shares, taking into account cash contributions to the property;
• for personal income tax - expenses for the acquisition of shares, shares, shares.

Payments that do not relate to dividends are listed in clause 2 of Art. Tax Code of the Russian Federation.

Organizations that pay dividends to foreign participants should first look at the double tax treaty (if there is one). The concept of dividends in it may differ from the Tax Code of the Russian Federation. For example, under some agreements, dividends may not be distributed in proportion to contributions.

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So, stock dividends are the share of a company's net profit that it transfers to its shareholders in proportion to the number of shares they own. Dividends are subject to income tax - in general, the broker will withhold it before the money is transferred. If the company is not registered in Russia, you will have to submit a declaration of income received to the tax office yourself.

Sources:

• Tax Code of the Russian Federation
• Federal Law “On Joint Stock Companies” dated December 26, 1995 No. 208-FZ

You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

How to pay dividends

To pay dividends, you need to make an appropriate decision, determine the amount and sources for payment, and also make sure that the organization has the right to distribute profits. The rules are different for LLCs and JSCs. We have collected them in the table:

What to do if interim dividends turned out to be more than net profit for the year, answered the experts at Kontur.School.

Dividend yield

Dividend yield is the ratio of the annual dividend paid by a company to the cost of one share of the same company. This financial indicator allows an investor to evaluate the financial effectiveness of their investments and understand how justified it is to have shares of a certain company in their portfolio.

For example, the cost of one share of VTB PJSC was 0.037 rubles. Dividend yield of the stock: 0.00109867761463259 / 0.037 × 100% = 2.969%.

There are companies showing a dividend yield of 7% or more - such indicators are considered good for Russian realities.

It is almost impossible to know in advance what dividend yield the shares of a particular company will show - the founders can pay consistently high dividends for several years in a row, and then decide that it is time to invest in the development of the enterprise and leave investors without bonuses.

Dividends are a fickle and unstable income, so historical returns are not always a comprehensive indicator of a stock's future profitability.

Nevertheless, when conducting a financial analysis of a company’s condition, it is still worth assessing the dividend yield of shares. If a company has found the resources to pay dividends, it means that it has prospects for further development.

Although there is an opposite opinion - some analysts believe that the decision to pay dividends indicates that the company's management does not have a strategy for the further development of the enterprise and simply does not know how to use the profits received.

The dividend yield of shares of any company can be independently calculated using the formula: share yield / share price × 100%. To do this, just go to the website of the company you are interested in and find all the necessary information there. If you don’t want to count on your own, you can use open sets of information on one of the exchanges.

How to record dividends in accounting

The payment of dividends based on the company's performance for the reporting year is an event after the reporting date. It is disclosed in the explanatory note. Accounting entries will be made already in the payment period.

For dividends to individuals, the postings are as follows:

• Dt 84 Kt 70 (75) - dividends accrued;
• Dt 70 (75) Kt 68 - personal income tax is withheld upon payment;
• Dt 70 (75) Kt 51 - dividends paid;
• Dt 68 Kt 51 - transferred to the personal income tax budget.

For dividends to legal entities:

• Dt 84 Kt 75.02 - dividends accrued;
• Dt 75.02 Kt 68 - income tax is withheld upon payment;
• Dt 75.02 Kt 51 - dividends paid;
• Dt 68 Kt 51 - income tax is transferred to the budget.

You will need supporting documents: minutes of the general meeting of shareholders (participants) and an accounting certificate. We recommend that you do not neglect documents. Regulatory authorities pay a lot of attention to dividends. After almost every payment, the tax office sends a request: to whom it was paid and how, where the tax was withheld, when it was paid and asks to present an accounting certificate and the decision of the general meeting.

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Payment terms for shares

According to paragraph 6 of Art. 42 of the Law “On Shareholders...” dated December 26, 1995 No. 208-FZ, the period for payment of dividends on shares is:

• 10 days - when paying money to a nominee holder or trustee who is a professional participant in the securities market;
• 25 days - when paying money to other shareholders.

The starting point for these periods is the day the register of shareholders is closed - the so-called dividend cut-off. All investors who hold shares in the company at the time of closing the register are entitled to dividends. If you bought shares after the register was closed, you will not be able to claim dividends.

Note! Transactions on the stock exchange are not closed immediately after they are carried out, so if you want to get on the register, you will have to buy shares at least 2 business days before the register closes.

How are dividend payments taxed?

Dividends paid by a JSC or LLC are not recognized as expenses for the purposes of calculating income tax. They are paid from net profit and are included in Art. 270 of the Tax Code of the Russian Federation, which lists expenses not taken into account for income tax.

The organization withholds personal income tax or income tax when paying dividends. Personal income tax - on dividends to individuals, income tax - on dividends to legal entities. But there are two exceptions: payment by a Russian organization through a depository and payment by a foreign organization. There is no need to pay insurance premiums in any case.

Tax on dividends to a legal entity

Income tax rates on dividends are presented in the table:

Income tax on dividends to Russian resident organizations is calculated according to the formula (clause 5 of Article 275 of the Tax Code of the Russian Federation):

N = K × CH × (D1 - D2), where:

• N - amount of tax to be withheld;
• K is the ratio of the amount of dividends subject to distribution in favor of the recipient of dividends to the total amount of distributed dividends;
• Сн - tax rate;
• D1 - the total amount of dividends to be distributed in favor of all recipients;
• D2 - the total amount of dividends received from other organizations (what changed in 2022?).

If the amount of dividends received, taxed at a rate of 13%, is greater than the amount of dividends paid (D1 < D2), then the withholding tax (N) will be negative. Then it is not calculated and is not reimbursed from the budget.

When dividends are paid to foreign legal entities non-residents of the Russian Federation, a rate of 15% or another established by international agreement is applied. The formula is simple (clause 6 of Article 275 of the Tax Code of the Russian Federation): N = Cn × D.

Dividends to foreign companies and non-resident individuals are taxed at a rate of 15%. A double tax treaty may provide for lower rates. They will need to be justified. To do this, the recipient of dividends confirms that he is a resident of the country with which the agreement is concluded.

Tax on dividends to individuals

Taxation of dividends with personal income tax is regulated by Art. 214 taking into account the provisions of Art. 226.1 Tax Code of the Russian Federation. And also Art. 210 Tax Code of the Russian Federation. The procedure for calculating and paying personal income tax depends on the legal form of the tax agent:

• JSC - calculates personal income tax in accordance with Art. 226.1 of the Tax Code of the Russian Federation and transfers it to the budget no later than one month from the date of payment of income to the shareholder (without a depository);
• LLC - calculates personal income tax in accordance with Art. 226 of the Tax Code of the Russian Federation and transfers the withheld tax no later than the day following the day of payment of dividends.

Dividend rates for individuals are shown in the table:

The tax is calculated using the formula:

N = K × CH × (D1 - D2), where:

• N - amount of tax to be withheld;
• K is the ratio of the amount of dividends subject to distribution in favor of the recipient of dividends to the total amount of distributed dividends;
• Сн - tax rate;
• D1 - the total amount of dividends to be distributed in favor of all recipients;
• D2 - the total amount of dividends received from other organizations (what changed in 2022?).

When we calculate dividends, we do not provide deductions, that is, they are calculated separately. This applies to all types of deductions: standard, social, property, professional (letter of the Federal Tax Service dated June 23, 2016 No. OA-3-17 / [email protected] ).

Federal Law No. 8-FZ dated February 17, 2021 introduced changes to the calculation of personal income tax on dividends. The amount of income tax withheld from dividends received by a Russian organization is taken into account when calculating personal income tax, which must be withheld from dividends paid in proportion to the share of participation in such an organization to an individual who is a Russian tax resident (clause 3.1 of Article 214 of the Tax Code of the Russian Federation). Read more

If dividends are paid to a non-resident foreign individual, the formula is applied: Н = К × Сн × Д1.

Dividends to non-residents can be paid in foreign currency (Article 6 of Federal Law No. 173-FZ dated December 10, 2003, clause 1 of the Bank of Russia Information Letter No. 31 dated March 31, 2005). There is no need to issue a transaction passport. Expenses in the form of negative exchange rate differences are classified as non-operating expenses (subclause 5, clause 1, article 265 of the Tax Code of the Russian Federation).

Kinds

By financial year stage:

• intermediate - paid before the end of the financial year;
• final - based on the results of closing the annual reporting.

By type of shares:

• ordinary - paid according to general rules as a percentage of net profit (after taxes) per security;
• preferred - calculated in a special way as a percentage of the security price, are priority, payments are guaranteed by the issuer and come from both profits and other sources.

By type of privilege:

• non-cumulative - in case of losses they may not be paid;
• cumulative (accumulative) - paid with a deferment, the obligation to pay is preserved and accumulated, if the conditions are violated, the voting rights are returned to the shareholders (the majority of such shares);
• guaranteed - payments are guaranteed by a third company.

By payment frequency:

• quarterly;
• semi-annual;
• annual

By form:

• in cash;
• financial assets (securities);
• real assets (property).

Difficult situations in taxation of dividends

When paying dividends, unusual situations occur. For example, you decided to issue dividends in goods or the recipient refused dividends. With taxes, everything will not be so clear here. Let's look at popular questions.

Dividends from previous years

Many people are interested in whether dividends can be paid using retained and unpaid profits from previous years. You can, and in this case you don’t have to wait until the end of the quarter or year. But in the decision on payment, it is important to indicate for what year and in what amount the profit is distributed.

Personal income tax is withheld at the rate that is in effect on the date of payment of dividends.

Withdrawal from the founders

How to pay dividends if a participant left the founders and the share transferred to the company? The Tax Code of the Russian Federation states that this must be done proportionally. Before the distribution of shares among the remaining participants, dividends can be paid to them disproportionately to their shares only if the participants themselves decide so or such a procedure is provided for by the charter.

Amounts exceeding the amount of dividends proportional to the share are not recognized as dividends for tax purposes (letter of the Ministry of Finance dated July 30, 2012 No. 03-03-10/84). This indicates that the tax rate will change. If you pay dividends, then the rate is 13%, and if the payment is not recognized as dividends, the rate is 20%. This is especially important with non-resident individuals: the rate can increase from 15% to 30%.

The Ministry of Finance says that if the payments are not recognized as dividends, then they also do not need to be shown as dividends in 6-NDFL. Other rates may apply and deductions may apply. Therefore, the tax office is interested in how you pay dividends: proportionally or disproportionately.

Waiver of dividends

What should I do if a participant asks to replace dividends with a fixed monthly compensation? How to distribute dividends and what to do with personal income tax?

The Ministry of Finance believes that since the participant does not want to receive dividends, then he gave them to you. At the same time, he must pay personal income tax, even if he refused to pay (letter of the Ministry of Finance dated October 23, 2019 No. 03-04-06/81252). The action algorithm is as follows:

• On the day the participant refuses dividends, calculate personal income tax from the “refused” amount;
• Withhold personal income tax from the compensation amount monthly (you can reduce it by deductions);
• Do not charge insurance premiums.

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Refusal to pay the actual value of the share

The former participant may refuse to pay the actual value of the share upon leaving the company. The courts consider this as debt forgiveness (Resolution of the Federal Antimonopoly Service of the North-Western District dated May 16, 2012 No. F07-3024/12).

The Ministry of Finance repeatedly says in its letters that the cost of the share that was abandoned is included in the organization’s non-operating income (letter of the Ministry of Finance of the Russian Federation dated October 2, 2018 No. 03-03-06/1/70715, etc.). It would seem, why is this income if we have already paid tax once when we calculated net profit? But regulatory authorities think differently.

Incorrect details for dividends

The founder did not provide new details. Dividends were transferred to him, but due to incorrect details, the entire amount was returned to the account. At the same time, personal income tax was withheld and paid to the budget.

Paid tax can be refunded. To do this, reflect the return of dividends in your accounting records, reverse the withheld personal income tax and submit an updated calculation of 6-personal income tax. At the same time, send a tax application, an extract from the personal income tax register and a payment order for tax payment. Personal income tax can be offset against future payments or returned to the account (letter of the Federal Tax Service dated 02/06/2017 No. GD-4-8 / [email protected] ).

Crediting a loan against dividends

The organization issued a loan to the founding legal entity. It will be repaid by offset of dividends due. How to arrange this?

The amount offset against the debt must be indicated in the income tax return as dividends actually received (clauses 5.3, 6.3 of the Procedure, approved by Order of the Federal Tax Service dated September 23, 2019 No. ММВ-7-3 / [email protected] ):

• in non-operating income on line 100 of Appendix No. 1 to sheet 02. The data in this line is transferred to line 020 of sheet 02;
• in income excluded from profit on line 070 of sheet 02.

And all this must be shown on the day of signing the agreement on offsetting mutual claims.

Dividends in kind

Dividends can be paid not only in money, but also in property. Elena Danyakina, a tax consultant, spoke about the peculiarities of taxation and the cases in which this is permissible in the Kontur.School webinar “Dividends in 2022. How to calculate, distribute, and withhold taxes.”

In short, you can pay dividends with property. But to avoid disputes with the tax authorities, it is advisable to enshrine this in the charter or approve it in the decision of the general meeting on the payment of dividends. In order to then calculate income tax and adjust the financial result, the founders should determine the monetary value of the transferred property. Personal income tax on dividends in kind will be paid by the recipient.

Receiving dividends from a foreign organization

Dividends from any organization, including a foreign one, are taken into account as part of non-operating income (clause 1 of Art. , clause 1 of Article 250 of the Tax Code of the Russian Federation). However, if they are paid by a foreign organization, then the Russian company itself calculates and pays income tax (clause 2 of Article 275 of the Tax Code of the Russian Federation).

Income tax is reduced by the amount of tax that was withheld from dividends at the location of the foreign company, but only if this is provided for in an international treaty between the Russian Federation and that country.

How much credit can I receive? When paying income tax in the Russian Federation, a Russian organization can receive a credit in an amount not exceeding the amount paid in the Russian Federation. For example, if you paid 15,000 rubles from dividends abroad, and at the Russian tax rate the tax is 13,000 rubles, then you can only take 13,000 rubles as a credit, and the remaining 2,000 rubles cannot be offset and written off as income tax expenses ( Letter of the Ministry of Finance dated May 31, 2017 No. 03-12-11/3/33520).

Conditions for registration:

• there is an international agreement or treaty on the avoidance of double taxation;
• payment of tax abroad is confirmed by documents;
• simultaneously with the income tax return, a declaration on income received outside the Russian Federation is submitted;
• At the end of the period, your organization has no loss.

If you receive dividends in foreign currency, you must convert them into rubles at the rate of the Central Bank of the Russian Federation on the date of receipt (clause 5 of Article 210 of the Tax Code of the Russian Federation).

Dividends in the income tax return

If you pay dividends to Russian organizations, you need to submit an income tax return to the tax office. This also applies to tax agents using the simplified tax system. In addition to standard sheets, it includes:

• subsection 1.3 section 1, which shows the amount of tax payable to the budget, according to the tax agent;
• sheet 03 “Calculation of income tax withheld by the tax agent”, which is filled out for each decision on the distribution of dividends (in section “A” the tax on income in the form of dividends is calculated, in section “B” the amount of dividends paid to each shareholder is indicated ( participant).

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Let's look at filling out section “A” of sheet 03 using an example.

Example . JSC Omega is the sole founder of Sigma LLC. In December of this year, Omega receives dividends of 70,000 rubles.

In September of this year, Omega JSC accrued and paid interim dividends to its shareholders - 253,000 rubles. At the same time, 55,000 rubles were paid through the depositary, and 198,000 rubles were paid independently:

• 110,000 rubles - to a legal entity;
• 88,000 rubles for resident individuals.

In sheet 03 of the income tax return this is reflected as follows:

How to show dividends on sheet 03 of the income tax return

The amount of dividends for calculating tax (line 091) is determined as follows:

The total amount of dividends is 253,000 rubles, of which:

• legal entities - 110,000 rubles (43.478%)
• depositary - 55,000 rubles (21.739%)
• individuals - 88,000 rubles (34.783%)

The distributed amount of dividends is 183,000 rubles (253,000 - 70,000).

The declaration includes income tax on dividends to legal entities:

• 183,000 rubles × 43.478% = 79,565 rubles
• 79,565 × 13% = 10,343 rubles

If dividends are paid to a foreign company, then only the amount of accrued dividends is reflected in the income tax return. The Federal Tax Service also submits “Calculation of the amounts of income paid to foreign organizations and taxes withheld.” It is submitted within the same time frame as income tax returns - no later than 28 calendar days from the end of the reporting period (clause 4 of Article 310 of the Tax Code of the Russian Federation, letter of the Ministry of Finance dated October 10, 2016 No. 03-08-05/58776 ).

Dividends in 6-NDFL

When paying dividends to individuals, tax agents submit 6-NDFL calculations. An updated form has been in effect since 2022. For a detailed analysis of the changes, see the article “New form of calculation of 6-NDFL from 2021”.

In 6-NDFL, dividends are included in sections 1 and 2 of the calculation for the period in which the payment was made:

• in fields 110, 111 of section 2 - the full amount of dividends distributed in favor of individuals participating in the organization;
• in fields 140 and 141 of section 2 - the amount of personal income tax calculated on dividends (before it is reduced by the amount of income tax);
• in field 160 of section 2 - the amount of personal income tax calculated from dividends and reduced by the amount of income tax subject to offset when determining the amount of personal income tax payable on the basis of clause 3.1 of Art. 214 Tax Code of the Russian Federation;
• in fields 020, 022 of section 1, you must reflect the amount of personal income tax calculated from dividends and reduced by the amount of income tax subject to offset.

The amount of tax withheld for the last three months of the reporting period, specified in field 020 of section 1, must be equal to the sum of the values ​​of all fields 022. That is, the amount of tax withheld in previous periods, despite the fact that the payment deadline came in the current period, in the new form in the first quarter of 2022 is not indicated. Therefore, the organization should reflect the dividends paid in December in section 2 of the 6-NDFL calculation for 2022.

The procedure for filling out 6-NDFL when paying more than 5 million rubles was discussed by the Federal Tax Service in a letter dated March 30, 2021 No. BS-4-11/ [email protected]

Dividends received by an individual, minus the amount of income tax to be credited, should be included in the “Amount of Income” field of the application “Information on income and corresponding deductions by month of the tax period.” Income code - 1010 (letter of the Federal Tax Service dated April 13, 2021 No. BS-4-11/4999).

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The emergence of disputes between JSC and shareholders

If a company violates the rights of its members, the latter can file a lawsuit. This is usually true in cases where funds are not paid in full or not paid at all. During the period of non-payment, interest is accrued, which can also be recovered through the court. The corresponding requirement is indicated in the statement of claim.

Non-payment of dividends is usually equated to an administrative offense (according to Articles 15-20 of the Code of Administrative Offenses of the Russian Federation). To assert your rights, you should go to an arbitration court, since an LLC is considered an entity conducting business activities. This rule is relevant even if the claim is filed by an individual.

IMPORTANT! If dividends were not received for a good reason (for example, the shareholder did not provide information about his current account), the participant can receive them within 3 years from the date of completion of payments.

What's changed in 2022

In 2022, new forms of income tax declaration and calculation of 6-NDFL appeared, a progressive income tax rate was introduced, and the rules for calculating dividends changed.

Change No. 1. New rules for calculating D2

From 2022, indicator D2 (dividends received by the tax agent itself) excludes any dividends taxed according to the Tax Code of the Russian Federation at a rate of 0%, as well as dividends from foreign entities to which the Russian taxpayer has the actual right and which were exempt from taxation in Russia ( Federal Law of November 23, 2020 No. 374-FZ, paragraph 5 of Article 275 of the Tax Code of the Russian Federation).

Change No. 2. Increased personal income tax rates

The calculation of personal income tax on dividends will be made on an accrual basis from the beginning of the tax period (Federal Law No. 372-FZ dated November 23, 2020). Personal income tax rate on dividends:

• 13% - if the tax base for dividends does not exceed 5 million rubles inclusive;
• 15% - in relation to the tax base for dividends exceeding 5 million rubles.

From 2023, the totality of tax bases will be considered. If now we look separately at dividends, separately at wages - whether they exceeded or did not exceed, then we will look at the total amount.

Where to look for payment dates

Information about the payment amount and register dates can be viewed on the Moscow Exchange website (in the company’s information card) or on the websites of the companies themselves (if there is a section “For Investors”). Also use dividend calendars - it’s more convenient.

• Dividend calendar Dokhod.ru – publishes data on Russian companies.

• Calendar from BCS is a convenient calendar from the largest Russian broker. The table can be filtered by instruments, economic sectors and individual parameters.

• NASDAQ Calendar - here is information about American companies.

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