If you’re living in Spain, or even considering a move here, it’s crucial to understand Spanish wealth tax (Impuesto sobre el Patrimonio).
This tax, often misunderstood, can have significant implications on your financial planning.
Whether you’re a resident or non-resident, a high-net-worth individual or an expat, understanding how this tax works and might apply to you, will help you manage your finances more effectively.
Spanish wealth tax is an annual levy on the total net value of an individual’s assets as of December 31st each year.
It applies to both residents and non-residents of Spain, but the rules vary depending on your residency status and the autonomous region in which you reside.
Net wealth in this situation, is calculated by taking the value of all assets and rights owned by a person, minus any debts or encumbrances, such as mortgages or loans. This includes:
However, some exemptions and deductions are available, depending on your circumstances and the region in which you live.
Wealth tax in Spain is not just a financial obligation, but also a politically charged issue.
Different political parties have varying views on the tax, with some advocating for higher rates for the wealthy, while others call for its reduction or elimination.
Consequently, tax rules on a national and regional level can change from year to year, and it’s important to stay informed on the latest developments.
Both Spanish tax residents and non-residents are subject to wealth tax, but the rules and tax base can differ significantly based on residency status and location.
If you are a Spanish resident, defined as:
You are required to pay your Spanish wealth tax on your worldwide assets. That means all the property, bank accounts, and investments you own globally are subject to this tax.
However, there are generous tax allowances in place, especially for your primary residence and certain other assets.
This means that for Spanish residents:
Non-residents only pay Spanish wealth tax on their Spanish assets, which can include real estate, bank accounts, and other properties in Spain.
For non-EU or non-EEA residents, regional wealth tax rules may apply, meaning that the specific rules of the region where your assets are located will govern your tax liability and potential allowances.
This means that for non-Spanish residents:
However, there are generous tax allowances in place, especially for your primary residence and certain other assets.
This means that for Spanish residents:
The 60% rule is an additional criterion Spanish tax authorities may use to determine tax residency. While the primary test for tax residency is spending more than 183 days in Spain within a calendar year, another key factor is the source of your income.
Under this rule, if at least 60% of your total worldwide income is derived from Spanish sources, you could be classified as a tax resident in Spain, even if you do not meet the 183-day threshold. This means that if the majority of your earnings come from Spanish employment, pensions, rental income, or business activities, the Spanish tax authorities may consider you a fiscal resident, making you liable for tax on your worldwide income.
This rule is particularly relevant for expats with financial ties to Spain, such as those who work remotely for a Spanish company, own rental properties, or receive significant income from Spanish investments.
Understanding this can help in tax planning and mitigating unexpected tax liabilities.
Spain’s autonomous communities have the power to set their own wealth tax rules, and many do.
These regional variations can have a significant impact on your liability, so it’s important to understand the rules that apply to your specific location.
In addition, certain regions like Madrid have reduced or even eliminated the wealth tax altogether in recent years, making them attractive options for certain individuals looking to minimise and mitigate their tax bill.
These regional minimum exemptions might vary if you have a disability.
Each Autonomous Community in Spain can apply special bonuses to reduce the wealth tax liability. Here are the regional policies:
The tax is progressive, meaning higher wealth is taxed at higher rates.
The rate starts at 0.2% for assets up to EUR 167,129.45, and increases to 3.5% for assets exceeding EUR 10.7 million.
The specific rates depend on the autonomous community in which you reside or have assets, as we have seen, each community can set its own rates. In regions without their own scale, the national rates apply.
The wealth tax rate is applied to the net taxable base, which is calculated after applying relevant tax reliefs and exemptions.
Here are the rates of the regions we assist with the most:
| Taxable base (up to EUR) | Tax liability (EUR) | Rest of taxable base (up to EUR) | Applicable rate (%) |
|---|---|---|---|
| 0.00 | 0.00 | 167,129.45 | 0.2 |
| 167,129.45 | 334.26 | 167,123.43 | 0.3 |
| 334,252.88 | 835.63 | 334,246.87 | 0.5 |
| 668,499.75 | 2,506.86 | 668,499.76 | 0.9 |
| 1,336,999.51 | 8,523.36 | 1,336,999.50 | 1.3 |
| 2,673,999.01 | 25,904.35 | 2,673,999.02 | 1.7 |
| 5,347,998.03 | 71,362.33 | 5,347,998.03 | 2.1 |
| 10,695,996.06 | 183,670.29 | and above | 3.5 |
| Taxable base (up to EUR) | Tax liability (EUR) | Rest of taxable base (up to EUR) | Applicable rate (%) |
|---|---|---|---|
| 0.00 | 0.00 | 167,129.45 | 0.25 |
| 167,129.45 | 417.82 | 167,123.43 | 0.37 |
| 334,252.88 | 1036.18 | 334,246.87 | 0.62 |
| 668,499.75 | 3108.51 | 668,499.76 | 1.12 |
| 1,336,999.51 | 10,595.75 | 1,336,999.50 | 1.62 |
| 2,673,999.01 | 31,255.10 | 2,673,999.02 | 2.12 |
| 5,347,998.03 | 88,943.88 | 5,347,998.03 | 2.62 |
| 10,695,996.06 | 229,061.43 | and above | 3.5 |
| Net Tax Base (up to EUR) | Tax Payable (EUR) | Remainder of Tax Base (up to EUR) | Applicable Rate (%) |
|---|---|---|---|
| 0.00 | 0.00 | 167,129.45 | 0.210 |
| 167,129.45 | 350.97 | 167,123.43 | 0.315 |
| 334,252.88 | 877.41 | 334,246.87 | 0.525 |
| 668,499.75 | 2,632.21 | 668,499.76 | 0.945 |
| 1,336,999.51 | 8,949.54 | 1,336,999.50 | 1.365 |
| 2,673,999.01 | 27,199.58 | 2,673,999.02 | 1.785 |
| 5,347,998.03 | 74,930.46 | 5,347,998.03 | 2.205 |
| 10,695,996.06 | 192,853.82 | 9,304,003.94 | 2.75 |
| 20,000,000.00 | 448,713.93 | and above | 3.48 |
| Taxable base (up to EUR) | Tax liability (EUR) | Rest of taxable base (up to EUR) | Applicable rate (%) |
|---|---|---|---|
| 0.00 | 0.00 | 167,129.45 | 0.24 |
| 167,129.45 | 401.11 | 167,123.43 | 0.36 |
| 334,252.88 | 1,002.75 | 334,246.87 | 0.60 |
| 668,499.75 | 3,008.23 | 668,499.76 | 1.08 |
| 1,336,999.51 | 10,228.03 | 1,336,999.50 | 1.56 |
| 2,673,999.01 | 31,085.22 | 2,673,999.02 | 2.04 |
| 5,347,998.03 | 85,634.80 | 5,347,998.03 | 2.52 |
| 10,695,996.06 | 220,404.35 | and above | 3.00 |
| Taxable base (up to EUR) | Tax liability (EUR) | Rest of taxable base (up to EUR) | Applicable rate (%) |
|---|---|---|---|
| 0.00 | 0.00 | 167,150.00 | 0.20 |
| 167,129.45 | 334.30 | 167,100.00 | 0.30 |
| 334,252.88 | 835.60 | 334,250.00 | 0.50 |
| 668,499.75 | 2,506.85 | 668,500.00 | 0.90 |
| 1,336,999.51 | 8,523.35 | 1,337,000.00 | 1.30 |
| 2,673,999.01 | 25,904.35 | 2,674,000.00 | 1.70 |
| 5,347,998.03 | 71,362.35 | 5,348,000.00 | 2.10 |
| 10,695,996.06 | 183,670.35 | and above | 2.50 |
Certain assets and rights are exempt from Spain’s Wealth Tax, provided that specific requirements are met. These include:
Additionally, the wealth of a married couple is assessed separately, meaning that both individuals can apply for exemptions and allowances individually.
Introduced in 2023 in a temporary capacity, it still is applicable in for the 2024 fiscal year. Spain’s Solidarity Tax on Large Fortunes applies to individuals with net wealth exceeding €3,000,000 and is applied in a uniform way across Spain. That means that no autonomous region can circumvent it or attempt to mitigate its application.
This tax is complementary to the wealth tax and is designed to target the ultra-wealthy.
If you’re subject to both taxes, you’ll receive a deduction for the wealth tax paid in your region.
There are a few strategies to minimise your wealth tax burden, but they require careful planning and restructuring of your assets.
A common approach involves restructuring investments to reduce the amount of wealth subject to tax.
Additionally, the Spanish tax system provides a 60% cap on the combined total of your Wealth and Income Taxes, which may allow you to adjust your holdings accordingly.
While there are no direct ways to avoid paying wealth tax entirely, there are strategic methods to mitigate how much you will have to pay towards it. These can include:
Wealth tax returns are generally filed between April and June of each year.
The filing process can be complex, especially if you own multiple properties or have international assets.
If your wealth exceeds €2,000,000 or you have assets subject to deductions or allowances, you are required to file a wealth tax return, using form 714 (Modelo 714).
We can help you with our expert legal services at PCC Legal.
Spanish wealth tax is a crucial consideration for expats and high-net-worth individuals living in Spain.
While there are opportunities to reduce your tax liability through exemptions, deductions, and strategic planning, it’s essential to consult with one our Wealth Managers at Private Client Consultancy who can help navigate the rules specific to your region and personal circumstances.
If you’re unsure about how the Spanish wealth tax affects you, or if you need assistance with filing your return, do not hesitate to reach.
We can provide tailored advice to ensure you’re making the most of available allowances and minimising your tax exposure.
We’re all about growing your wealth and protecting what belongs to you with peace of mind.
Disclaimer: Tax laws, rates, and reliefs are subject to change and may vary depending on individual circumstances and residency status. Any information provided on this website is based on our understanding of current regulations (or the date of when the content was published) and should not be considered personalised financial or tax advice. As tax obligations can differ across regions, countries and evolve over time, we strongly recommend seeking professional advice tailored to your specific situation before making any financial decisions.
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