Wealth Tax in Spain

Income and wealth tax for non resident in Spain

Are you living in Spain and do you wonder if you have to pay wealth tax? The answer is probably yes, but let’s start from the begining.

What is the Spanish Wealth Tax?

The Wealth Tax in Spain is an annual tax, payable on the total net value of your assets held on 31st December. The total net value is understood as: All assets and rights of economic content owned by a natural person deducting charges and encumbrances which diminish its value, as well as personal debts and obligations.

Who pays Wealth Tax?

Wealth tax may catch you by surprise, as Spain is one of the few countries in which this extra tax is approved. Both residents and non-residents are subject to paying Spanish wealth tax. This tax does come with a series of Allowances, which means that many people are exempt from this tax, however, for wealthier individuals, it can have a significant impact.

The rules vary depending on your residency status in Spain and the region you are in, as several Spanish autonomous regions, including the Comunidad Valenciana, have their own tax laws in force, which allow them to set their own tax-free allowances and deductions or establish the levied tax rate they see fit.

Wealth Tax for residents

  • Pay tax on worldwide assets.
  • Have ample tax allowances.
  • Are entitled to a 500,000 € deduction per person in the C. Valenciana (700.000 € in Murcia).
  • Are entitled to a deduction of 300,000 € per owner on your main home.
  • Are required to submit the wealth tax declaration:
    • If after applying these allowances, the net result is positive.
    • If the total gross value of your goods exceeds 2 million euros.

Wealth Tax for non-residents

  • Pay tax on Spanish assets only.
  • From this year, with the introduction of the Law 11/2021, it includes the possibility of applying regional wealth tax regulations to non-residents in third countries (outside the European Union or the European Economic Area). It shall be the autonomous region in which your assets with greatest value are located.
  • Otherwise, you are entitled to a 700,000 € deduction per person.
  • Are required to submit a wealth tax declaration:
    • If after applying these allowances, the net result is positive.
    • If the total gross value of goods in Spain exceeds 2 million euros.
Taxable persons not resident in Spanish territory, when they operate through a permanent establishment or when the tax authorities requires it due to the amount and characteristics of the taxpayer’s assets located in Spain, have the obligation to appoint a representative before the tax authorities in relation to their obligations for this tax.
 

videoconference

What is included in your Estate?

Main assets levied by the Wealth Tax

  • Real estate
  • Bank deposits and investments
  • Assets and rights owned by individuals related to professional or business activities
  • Luxury assets such as jewellery, fur coats, boats, fast cars and other vehicles
  • Art objects and antiques
  • Life insurance, life annuities and temporary annuities
  • Royal rights, administrative concessions and intellectual property rights

Spanish Wealth Tax exemptions

  • Household contents (excluding those above)
  • Works of art and antiques
  • Economic rights in some instruments such as pension rights
  • Business assets when they derive from a professional activity that must constitute your main source of income and must be carried out your own account and on a habitual basis.
  • Intellectual property rights in the author’s ownership
  • Shares in entities, listed or unlisted, with the following requirements:
    1. You own at least 5% of the share capital (or at least 20% including shareholdings belonging to a spouse or other family members)
    2. You carry out managerial duties for the company, perceiving a salary for such activities which is at least 50% of your total net earnings.
    3. Can´t have as its principal activity the management of movable or immovable property.

How is Wealth Tax calculated in Spain?

A taxpayer’s wealth takes into account the total net value of all assets. However, there are different rules that apply to calculate each individual value, depending on the type of asset. For example, homes are valued at the highest value between the purchase price, cadastral value or value set by the administration, whereas bank accounts will be valued by the highest balance between the 31st December and the average balance of the last quarter.

Once the assets have been valued, the allowances are applied. Also, Spanish Wealth tax is a progressive tax, so the higher the wealth the higher the tax.

Below you will find two tables comparing the National tax rate, which ranges between 0.20% and 3.50%, and the tax rate in the Comunidad Valenciana which varies very slightly ranging between 0.25% and 3.50%.

Spanish wealth tax rates

spanish wealth tax rates

Comunidad Valenciana wealth tax rates

comunidad valenciana wealth tax rates

When do I have to submit my Wealth Tax Declaration?

Those required to submit a wealth tax declaration form in Spain will have from April to June 30th of each year, coinciding with the income tax period.

The IP is a strictly individual tax, so a married couple must submit one form each and for example the ownership of the property and rights which are common to both, shall be attributed in half to each of them. The form to be sent is the form 714.

Please note that tax rates, scope and reliefs may change and we advise that you to seek professional advice from Tax advisors who can take care of the Wealth Tax for you.