Wealth tax in Spain

In 2008, Spain restored the Wealth Tax (Impuesto sobre el Patrimonio) for both residents and non-residents.

If you are resident in Spain you are subject to the Wealth Tax for all of your worldwide assets. Nevertheless you can get a personal tax-free allowance (which depends on each Spanish Autonomous Region rules) plus an additional allowance of up to €300,000 against the value of your main home (excluding properties owned through corporate structures). Tax treaties with other countries may apply, depending on where else you are taxed.

If you are non-resident in Spain you are taxed only on your assets in Spain over 700,000€. If you’re married then you and your wife will both benefit from this allowance so you will be able to claim a €1,400,000 allowance against your joint assets.

“Assets” include cars, boats, investments, expensive jewelry and artworks. Other assets are excluded, such as household items.

The wealth tax is an annual tax on the total value of your taxable assets as of 31 December. If you are required to pay wealth tax, you must submit the wealth tax form after the end of the tax year and pay it between May and June.

Tax Rate

If you are non-resident, you are taxed from 0.2% to 2.5%, depending on the amount over your allowance. The higher the amount, the greater the percentage. The top rate applies starting around 10 million euros.

If you are resident, the tax rate depends on where your fiscal residency is in Spain. The percentages that apply to the non-residents is the default amount for residents, but some regions set their own percentages. For example, in Madrid there is a 100% allowance: residents of Madrid don't have to pay the wealth tax at all.

The total amount of this tax, including the shared amount of the general part of the IRPF tax base, may not exceed 60% of the general part of the tax base of this tax. In case the addition of these two amounts exceeds this limit, the amount of the wealth tax will be reduced so as not to exceed this limit, without the reduction being able to exceed 80%.

Example

Bob and Judy are married and non-resident in Spain. As of December 31st, Bob and Judy have a house in Spain valued at 2.5 million euros, plus a bank account with 100,000€. They each need to file a wealth tax form, so we divide their assets. Each will have assets of 1,300,000€. Subtracting the allowance of 700,000€, we get 600,000€, so the tax rate for each of them is 0,5%. Each will pay 3000€. If Bob and Judy were residents of Spain, in a region that uses the default percentages, then the allowance for each would be 700,000€ plus 150,000€.

Articles:
Personal Taxes (residents and non-residents)
Taxes for Property Owners (residents and non-residents)
Taxes for Corporate Property Owners
Inheritance Tax (non-residents)

FAQs:
How do I calculate the value of my house for the Spanish wealth tax?

How do I calculate the value of my house for the Spanish wealth tax?

The value of the properties you own will be the highest of:

• The purchase price of the property
• The cadastral value of the property
• The value that the Spanish Tax Office recognizes as valid

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