Those receiving their income starting January 1, 2020 will be the ones benefiting from the provisions of the law regarding the reduction of the tax rate on dividends from 10% to 5%, with a corresponding drop in the withholding tax rate.
Therefore, this applies to the profits distributed by SA, Ltd. and capital companies, as long as the decision to authorize distribution (current or previous tax years) has been taken by their competent authority after 1.1.2020. Thus, for profits which they distribute with a deadline for their approval before 1.1.2020, a 10% withholding rate applies.
As long as interim dividends have been distributed by a SA or provisional outtake against Ltd. or capital companies’ profits have been made within the fiscal year of 2019 with a 10% withholding tax, given that the distribution decision is subject to the approval of a regular general meeting of shareholders or partners, respectively, which will take place in fiscal year 2020, the reduced rate of 5% and any additional 5% tax refunded shall be refunded as unduly paid.
It also applies to profits distributed by statutory and non-statutory corporations, civil law societies carrying on business or occupation, civil speculative corporations, joint-stock companies, and consortia with duplicate books, for which the time eligibility of their legal persons is due after 1.1.2020. The time of acquisition of the right to receive the distribution of profits (dividends) for profits of the current tax year, as derived from the relevant entries in the Registers, shall be deemed to be the last day of the following month from the closing date of their tax filing.
For any distributable earnings from past tax years, as well as for provisional outtake from such companies, since the time of acquisition of the said income is considered the time that the distribution or takeover (credit or payment) takes place, as shown in the relevant records, tax is withheld at the applicable rate of the time of distribution or funding (for past-year distributions or earnings outtakes within fiscal year 2019 10% of the tax is withheld, while for past-year distributions tax or profit deduction within the tax year 2020, there is a 5% tax withholding).
Specifically for income from dividends of foreign origin, the reduced rate of 5% applies when the acquisition of this right of collection (e.g. decision of the competent institution) is after 1.1.2020 and if it is not easy to ascertain the time of payment, by credit to his bank account or otherwise, it takes place after 1.1.2020. /ibna