I am getting a lot of questions on wealth tax as it is a bit of a grey area and not a lot of people mention or talk about this tax.
All Spanish residents are subject to wealthtax on their total assest as at the end of Decemeber in the previous year. Some Non Resident s can also be subject to this tax also.
Wealth tax is calculated on the net wealth of an individual.
For residents, this tax applies to the ownership of world wide assets less any allowable charges or debts.
Assets liable to the tax include immovable property, cars, cash, shares, jewelry etcç. There is an allowance for mortgages, charges and loans.
The law establishes an exemption from Wealth Tax for some assets, for example, those forming part of Spanish Historical Heritage, household furnishings, works of art and antiques, provided that their value does not exceed certain limits established by the legislation.
The value of a property is based on the cadastral value, or as declared on the deed*Escritura, tax authroites can undertake any valuation of bank accounts.
For residents they benefit from the following alowances, not forgetting each of the autonomous regions have the power to amend allowances but only for residents.
The general allowance is €700.000
On top of this we can add a the habitual reisdence of €300.000
These are effectivley doubled for couples, including the main residence allowance.
So in excess of one million before wealthtax is considered it is then charged on a progressive startig rate of 0.2%
Catonalonia is €500.000 along with Valencia and Navarra
Madrid is 100% tax relief, not paying anyting at all
If you have a business as your sole source of income and if certain requirements are met then this can be 100% exempton, the rules are;
Taxpayer should have a significant participation in the share capital (5 per cent individually or 20 per cent jointly with his/her spouse, ascendants, descendants and collateral relatives up to the second degree) of entities that carry out economic activities.
Taxpayer or any of his/her close relatives (his/her spouse, ascendants, descendants and collateral relatives up to the second degree) should perform management activities in the company and receive remuneration for these functions that exceeds 50 per cent of his/her/their total employment, professional or business income from the company.
The entity should not be a property holding company, e. more than 50 per cent of its assets are not considered as being subject to business activity or securities.
The exemption will only be applicable to the value of shares that qualify as being subject to the commercial activity, minus the debts related to it. Therefore, if all the requirements are met, this is a good option to reduce the wealth tax debt.
For non residents it is only applicable to assets held in Spain
Non residents with assets in Spain are subject to the national rates.
It is payable on the total net value of your taxable assets at the end of each year (i.e. 31st December).