Luxury boats in a harbour is an asset looked at for wealth tax in Spain

The wealth tax in Spain is something all Expats need to consider. The Spanish government uses your total global assets to calculate your Spanish tax liability, but the amount you pay varies by region. We’ll explore who is liable, how to calculate your net worth, and how much wealth tax you’ll pay in each region.

Spanish Wealth Tax – impuesto sobre el patrimonio

The patrimonio is an annual tax, commonly referred to as the wealth tax, introduced in 1977 and amended in 1992. It is calculated using the total net value of eligible assets on 31 December each year. The tax is progressive, so the percentage tax increases with the full value of your assets less associated liabilities. There is a national rate, but some regions apply different tax percentages and thresholds.

Each region applies a deduction, meaning net worth under the deduction is not taxed. The national deduction is €700,000, but it varies in some autonomous regions, and we’ll cover these in detail later in the article.

An Individual Tax

The tax is applied to individuals. This means that each individual must declare joint assets as the percentage owned. So, if a husband and wife jointly own a house worth €1,000,000, they would declare 50% of the value (€500,000) each.

In addition, the deductions are individual as well. In the example above, the husband and wife could claim standard national deductions of €700,000 plus the €300,000 for the family home. So, this makes €1,000,000 each, or €2,000,000 in total.

Spain Wealth Tax Rates – National Rates

10,695,996And Above2.50%
Spain Wealth Tax Rates – National Rates

Communities with different wealth tax rates and thresholds.

Region of Murcia0.24%3.00%
Andalucía (note: 100% relief so effective 0%)0.24%3.03%
Community of Valencia0.25%3.12%
Exceptions to Spain Wealth Tax National Rates

Note: The Madrid and Andalucía regions apply a 100% wealth tax relief. This means that you have an effective 0% rate and pay no tax in these two regions.

Who Pays Wealth Tax in Spain?

Your region’s wealth tax policy will dictate how and if you are liable for this tax. You should speak to a Spanish taxation expert to ensure you follow your regional requirements.

In general:

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Wealth Tax Deductions

There is a national deduction schedule, but there are also regional variations. The federal deductions will apply if a region has not set a deduction.

National Deductions

  • Individual Deduction: €700,000
  • Family Home in Spain: €300,000
  • Any wealth tax paid in a country with a Spanish Taxation Treaty (DTT).

Regional Deductions

Each autonomous region can apply different deductions and levels. These override those set nationally. Here are three examples of variations.

  • In Cataluña, the individual deduction is lower at €500,000. However, the family home deduction is higher at €500,000.
  • Some regions in Spain allow deductions related to your professional activities.
  • Others, including Madrid and Andalucía, apply a 100% deduction. This means you will pay no tax in these regions (although you may still have to submit your declaration.)

These variations make it vital to consult a quality tax lawyer to ensure you are filing correctly. They’ll help you to claim all available deductions to minimize the tax you pay.

Included Assets

You work out your total net worth as of 31 December each year. So, something purchased after 1 January and sold before 31 December of the same year will never be liable for wealth tax.

Remember: The calculation is on net assets, so associated liabilities like mortgages or loans are deducted from values.

  • Real Estate (including your primary residence).
  • Vehicles (including cars, boats, and airplanes).
  • Investments, shares, bank accounts, and savings.
  • Business assets (in some cases).
  • Jewelry (in some cases).
  • Art (in some cases).

Excluded Assets / Exceptions

  • Household Contents (apart from those in the list above.)
  • A business that a) you own a significant shareholding in, b) you manage, and c) pays a significant part of your net income.
  • Pension rights.
  • Business assets (in some cases).
  • Jewelry (in some cases).
  • Art (in some cases).
  • Intellectual Property rights.

Spain Wealth Tax Calculator

You can calculate your wealth tax liability using this formula.

(Total Net Assets – Total Deductions) * Wealth Tax Percentage.

So, you’ll pay zero tax if your deductions or allowance exceed your assets.

Here’s an example of a couple, Sue and Tim, using the standard national rates and deductions.

AssetsAsset valueSue %SueTim %Tim
Family Home1,000,00050%500,00050%500,000
Joint Shares600,00050%300,00050%300,000
Sue’s Boat500,000100%500,0000%
Tim’s Tiara100,000100%100,000
Total Assets2,200,0001,300,000900,000
Deduction – Individual700,000700,000
Deduction – Home300,000300,000
Total Deductions1,000,0001,000,000
Taxable Amount (Assets – Deductions)300,0000
Spain Wealth Tax Calculation

There is a simpler wealth tax calculator – book an appointment with our expert Spanish Tax Lawyer here.

How to File

There are two forms (modelos) you’ll need to know:

Modelo 720

The Modelo 720 is for declaring assets outside of Spain. You’ll need to file this form if you have assets exceeding €50,000 globally. You should submit the form annually if values change by more than €20,000 (total or single).

Deadline: 31 March

Remember: This is an individual tax, so joint owners must each submit a form declaring their percentage ownership of the asset.

Modelo 714

The Modelo 714 is for declaring Spanish assets. Two groups need to submit this form:

  1. Those with Spanish assets worth more than €2,000,000.
  2. Anyone liable for a Spanish Wealth Tax payment.

Deadline: 30 June

Remember: This is an individual tax, so joint owners must each submit a form declaring their percentage ownership of the asset.

The 60% Rule – Pay Less Tax

For some Spanish taxpayer residents, you can reduce the amount of personal wealth tax they pay.

The total of the wealth tax and income tax you pay in a single year has an upper limit. The amount must be at most 60% of your taxable income.

A good tax advisor helps you understand how to manage your investments and income tax for the 60% rule.

Note: The minimum wealth tax amount you’ll pay is 20% of the assessment, even if the 60% rule drops you below this figure.

New Solidarity Tax – 2023 and 2024

The Spanish Ministry of Finance has announced the ‘impuesto de solidaridad a las grandes fortunas‘ as a temporary measure for 2023 and 2024. It will only apply to individuals with net worldwide assets over €3,000,000 who are tax residents in Spain.

Important: You won’t pay both the solidarity tax and wealth tax. If you qualify for the solidarity payment, this will include that liability.

The tax is progressive, so the percentage payable will increase with asset value. Estimates are that the Solidarity Tax will impact around 0.1% of Spanish taxpayers.

The government does offer deductions similar to those for the wealth tax. Everyone gets a €700,000 deduction plus €300,000 for a main home in Spain. Other deductions, including qualifying business, may be available. This means for most people, a minimum of € 4,000,000 will be the base for solidarity tax liability.

So, the Solidarity Tax rates (after deductions) are as follows:

FromToTax Rate
€ 3,000,0000%
€ 3,000,001€ 5,347,9981.7%
€ 5,347,999€ 10,695,9962.1%
€ 10,695,997Upward3.5%
Spanish Solidarity Tax Rate Table

The Spanish government says this tax law will be temporary and will not be retained after 2024.

Note: This is a central tax, so there will not be regional variations.

Need Help With Your Wealth Tax?

This is a complicated tax with many variables. The inclusions, deductions, 60% rule, and autonomous regional variations make calculating what you’ll owe complex. For this reason, we recommend speaking to a good Spanish Tax advisor. They’ll understand how to minimize the amount and pain of the Wealth Tax in Spain.

FAQ – Wealth Tax in Spain

How much is wealth tax in Spain?

The Spanish Wealth tax is progressive, and the amount you pay depends on several factors. These factors include where you live in Spain, your net assets, and what deductions you can claim.

Where in Spain is there no wealth tax?

The autonomous regions of Madrid and Andalusia have 100% deductions, meaning you effectively pay no wealth tax.

Will Spain abolish wealth tax?

The tax was introduced as a temporary measure in 1997. It has been abolished and reinstated over the last 25 years. There are constant rumors that the government will repeal it, but there is no end in sight yet.

Do you have to pay wealth tax in Spain every year?

Yes, if you meet the threshold, you’ll have to pay tax on your global assets each year.

What assets are exempt from Spanish wealth tax?

Household goods, pension rights, intellectual property, and some businesses are exempt from wealth tax in Spain. If you have a mortgage, it is offset against the value of the property.

What is the Solidarity Tax in Spain?

The Solidarity tax is a temporary progressive tax on worldwide assets over € 3,000,000. Many people will be able to claim deductions of € 1,000,000, so Spanish tax residents with over € 4,000,000 of assets are mostly impacted. Solidarity tax rates start at 1.7%, and the top rate is 3.5%.

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