Wealth tax in Spain: a surprise tax

According to the INE, there are currently more than 5 million foreigners living in Spain. The good climate, the job opportunities or the paradisiacal landscapes of the peninsula make it one of the favorite destinations to have a residence. There are many ways to live in Spain, such as with the Spanish non lucrative visa permit or the Golden Visa. However, you have to take into account the fees that you have to pay. But, there is one of them that comes as a surprise.

The Wealth Tax in Spain is an annual tax, payable on the total net value of your assets held on 31st December.  Residents and non-residents are subject to paying it. May catch you by surprise, as Spain is one of the few countries in which this extra tax is approved.

What does this tax consist of?

This tax was reintroduced in Spain during the country’s financial crisis. Like other taxes such as income tax or capital gains tax, it has to be paid. 

Total net worth is understood to mean: All assets and rights of economic content owned by a natural person, less any charges and encumbrances that diminish their value, as well as personal debts and obligations. 

It is an individual tax to be filed annually and there is no possibility to file it jointly with the partner or spouse. 

Who has to pay it?

Both residents and non-residents are subject to this tax and the tax rules vary according to their state of residence in the country and the autonomous community in which they are located.

• For residents, they are obliged to file a tax return for this budget if the gross value of their assets exceeds €2 million or if the net result is positive. In addition, they are entitled to a deduction of €300,000 per owner on their main residence. 
• Non-residents are obliged to pay this tax on Spanish assets only. Like residents, they are obliged if the net result is positive or if the assets in Spain exceed €2 million.  With the introduction of Law 11/2021, the possibility of applying the autonomous community wealth tax regulations to non-residents in third countries (outside the European Union or the European Economic Area) is included.

What is included in your estate?

In Spain, the main assets taxed by Wealth Tax are:

• Real estate such as buildings, land or plots of land.
• Bank deposits and investments
• Luxury goods such as jewellery, boats, cars…
• Objects of art and antiques
• Life insurance, temporary annuities…
• Intellectual property rights
• Assets and rights of natural persons related to a professional or business activity.

Spanish Wealth Tax exemptions

• Household contents 
• Pension rights 
• Business assets, provided that they derive from a professional activity which constitutes their main source of income
• Intellectual property rights owned by the author
• Shares in entities, whether listed or not, provided that they hold at least 5% of the share capital and that they cannot have as their main activity the administration of movable or immovable property.