Modelo 123: withholding on dividends and interest paid by your SL

What modelo 123 is and who files it

Modelo 123 is the self-assessment of withholdings and payments on account on certain income from movable capital. It does not declare a tax of your SL: it declares the IRPF (Spanish personal income tax) of other people, your shareholders or your lenders, which the company deducts when it pays them and hands to the tax office on their behalf. It is the sibling of modelos 111 and 115, with the same calendar and a different kind of income.

Those obliged to withhold are legal persons and other entities that pay taxable income, and also businesses and professionals when they pay it in the course of their activity (article 76.1 of the IRPF Regulation). An SL always is. If the recipient is another company, the obligation comes from article 128 of the Corporate Income Tax Law, with the same 19% as the general rate (paragraph 6.a).

The rate is 19%, set by article 101.4 of the IRPF Law and repeated in article 90.1 of the Regulation. The base is the full consideration due or paid (article 93.1): you withhold on the gross amount, not on what reaches the bank.

Modelo 123: dividends, shareholder loan interest and the shareholder current account

In a small SL, modelo 123 comes up in four situations:

• Dividends to shareholders. The distribution agreed by the shareholders' meeting, or an interim dividend, carries a 19% withholding if the shareholder is an individual resident in Spain. The company-law requirements for the distribution are in the guide to paying dividends in an SL.
• Interest on a shareholder's loan. The interest the SL pays to the shareholder who lent it money is income from movable capital and carries 19%. How to set a market interest rate and document the loan is in the guide to the shareholder loan to the SL.
• Interest on a loan from a private individual. If the lender is a relative, a friend or any individual who is not a shareholder, the treatment is the same: 19%, modelo 123 and modelo 193. Only the related-party element disappears.
• Interest on the shareholder current account. If the shareholder has a balance in their favour in account 551 and you have agreed that it bears interest, that interest is treated like that of a loan.

If the shareholder is another company that meets the requirements of the exemption in article 21.1 of the Corporate Income Tax Law, the dividend carries no withholding (article 128.4.d of that law). And if the shareholder or lender is not resident in Spain, the tax is non-resident income tax and the forms are the 216 and the 296, not the 123: the guide to non-resident taxation explains it.

What does not go in modelo 123

Almost all errors with the 123 come from putting in it income that has its own form:

• The director's remuneration is employment income, although its withholding may also be 19% if the company's turnover is below 100,000 euros (article 101.2 of the IRPF Law). It goes to modelo 111, not the 123. The guide to director's remuneration explains it.
• Payroll and professionals' invoices with withholding go to modelo 111.
• Rent for the premises or office carries a 19% withholding, the same figure, but goes to modelo 115.
• Repayment of the principal of a loan is not income for the person who recovers it and carries no withholding. You only withhold on the interest.
• Interest the SL receives from a shareholder who is an individual generates no withholding: the shareholder does not act as a business and is not obliged to withhold.

The practical rule: 19% is the figure of several forms. What decides the form is the nature of the income, not the percentage.

Withholding or payment on account: the difference

The 123 is called the form "of withholdings and payments on account" because it collects two different things with the same destination:

• Withholding: you pay in cash and deduct 19% of what you hand over. The shareholder receives the net amount and the company pays over the difference.
• Payment on account (ingreso a cuenta): you pay in kind, with an asset or a right, and there is no cash to deduct from. The company pays over, out of its own pocket, an amount calculated by applying 19% to the acquisition value or cost of the asset increased by 20% (article 103.1 of the IRPF Regulation).

There is one case of payment on account that fully affects small SLs: the secondary adjustment. When an operation with the shareholder is agreed below market value, for example when the SL lends money to the shareholder at no interest or sells them an asset below its value, the difference between the agreed value and the market value can be requalified and serve as the base of the payment on account (articles 93.6 and 103.2 of the Regulation, by reference to article 18.11 of the Corporate Income Tax Law). In both cases, the shareholder deducts what was paid over in their income tax return as a payment on account.

Modelo 123 deadlines and the annual summary 193

Article 108.1 of the IRPF Regulation sets the calendar: in the first twenty calendar days of April, July, October and January you file and pay what was withheld in the previous calendar quarter. Those withholding agents to which article 108.1 itself refers file monthly, that is, those in numbers 1.º and 2.º of article 71.3 of the IVA Regulation: large companies, with a turnover in the previous year above 6,010,121.04 euros, and anyone who acquired a business whose turnover, added to their own, exceeds that figure, in addition to public administrations with a budget above 6 million euros. For the rest of 2026:

• Third quarter of 2026: 1 to 20 October 2026.
• Fourth quarter of 2026: 1 to 20 January 2027.
• Modelo 193 for 2026: in January 2027. The general online deadline is 1 to 31 January (article 108.2); as 31 January 2027 is a Sunday, it moves to the next working day, like the summaries 190 and 180 in the tax calendar.

The quarter that counts is the one in which the income falls due, not the one of payment. The obligation to withhold arises when the income is due, or when it is paid if earlier (article 94.1 of the Regulation). Dividends fall due on the date set by the resolution or, if it sets none, on the day after it is adopted. Interest falls due on the maturity dates of the contract, even if the shareholder does not collect it or it is added to the principal.

With no taxable income in the quarter there is no form: the nil return only applies if you paid income subject to withholding and, because of its amount, there was nothing to withhold (article 108.1). The 193 details each recipient and, before the income tax campaign starts, you must give each shareholder or lender their withholding certificate (article 108.3).

Modelo 123 example with a 10,000 euro dividend

In a single-member SL there is no meeting: the sole shareholder, resident in Spain, exercises its powers and records it in the minutes. On 29 June 2026 it decides to distribute a dividend of 10,000 euros from voluntary reserves, without setting a payment date. As the decision sets no date, the dividend is due from the next day, 30 June, so the withholding belongs to the second quarter and is paid in the July modelo 123, even if the money leaves later.

If the dividend comes from the year's profit, the debit goes to account 129 instead of 113. The withholding stays in sub-account 4751 of account 475 until you pay the form. On the other side, a corporate shareholder collecting that dividend without exemption would record it in account 760 at the gross amount and the withholding in account 473.

Example with the interest on a shareholder loan

The shareholder lent the SL 20,000 euros on 1 January 2026, repayable in three years, with 4% annual interest due every 31 December. On 31 December 2026, 800 euros of interest fall due. The SL withholds 19%, 152 euros, and pays the shareholder 648. As the due date falls in the fourth quarter, the withholding goes to the modelo 123 filed from 1 to 20 January 2027, and the interest appears in the 2026 modelo 193.

The interest is a financial expense of the SL in account 662, deductible in its modelo 200 (the corporate tax return). The principal stays in the debt to the shareholder, for example in account 171 if it is due in more than a year. If the shareholder decides not to collect and the interest is added to the principal, the entry swaps 572 for the debt account, but the withholding is paid over all the same in January.

If it is the other way round and your SL lends to another company, the debtor withholds from you: you record the gross interest in account 762 and the withholding in 473, which you recover in your Corporate Income Tax.

Frequently asked questions

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