Carlos Baos – Beware of wealth tax in Spain

Careful with the Tax Revisions of the Wealth Tax in Spain for Non-Residents. 

The Tax Agency is always on the lookout. We have commented on this in countless articles. Our firm has recently become aware of an in-depth review and audit by the Spanish Tax Office to Non-Residents. Claiming thousands of euros for past due exercises against taxpayers that did not declare the Wealth Tax when they should have. In today’s column we will briefly explain to our readers, what this tax really consists of. And the essential principles to keep in mind to avoid unpleasant surprises with the Spanish Tax Authorities.

Why? When? Where? Keys to Wealth Tax in Spain.

This tax levies on the wealth of individuals. Encompassing all assets and rights that have monetary value and that are owned by a person. However, deductions can be applied on the gross net to reduce its value. Personal charges, encumbrances, debts, etc. for which the taxpayer is liable. Maybe the clearest example is a mortgage. If you own a house of 900.000€ and you had to get a mortgage to buy it, the mortgage loan could be deducted.

The value of the assets is calculated, generally (there are exceptions) on the 31^st of December of each year. And the tax must be presented in the next year, under the same “window” of the Personal Income Tax. Meaning that the deadline for the Wealth Tax of 2023, ends on the first day of July of 2024.

If you have assets of more than two million euros, you are obliged to submit this tax return. Also, if once the corresponding deductions and allowances have been applied, the result is positive and you have a tax liability, you must also present the tax.

Real estate assets, bank accounts, investments, etc…

Wealth Tax accounts for all assets. Below a brief summary of the assets to be declared: real estate holdings, business endeavours, banking assets, stocks and bonds, life insurance policies, personal possessions like jewellery, cars, ships, etc… given that they are assets/properties/rights applicable or to be fulfilled in Spain.

Bottom threshold / Minimum allowable.

Non-Residents in Spain can choose between the threshold of the region where the assets are located and the national threshold. In the Valencian Region, the minimum allowable (amount under which, not tax is payable) is set at 700.000€. Whereas national regulations in force set this amount in half a million euros. When the net worth is under this amount, not tax is paid.

Dealing with tax obligations in Spain can feel overwhelming, but you don’t have to face them solo. At White-Baos Lawyers, we’re dedicated to guiding you through the intricacies of tax compliance. Do not hesitate to contact our experienced team of professionals for expert assistance.

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Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

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