Residents and expats alike should be aware of the Spanish wealth tax. An annual tax that is taxable on the total net value of your worldwide assets. Although, non-residents only pay wealth tax on assets located with Spain itself, this is a reason why it is important to understand the basics.
If you want to read more about the Wealth Tax in Spain, then please read on. If you want some other links to related articles, please look below:
Wealth Tax In Spain
Wealth tax in Spain ranges from 0.2%-2.5% of net assets.
Non-Residents in Spain & Wealth Tax
If you’re living in Spain as a non-resident for tax purposes, you’ll only be taxed on your assets within the country that are valued at over €700,000. This means that if all the rest of your possessions are located outside of Spain, they are not subject to wealth tax.
Situations, where you will be a non-resident and have to pay wealth tax, are:
- When you are a married couple, you can claim an allowance of €1,400,000 against all included joint assets.
- If you inherit wealth above €700,000 from Spain, you will have to pay inheritance tax, and you will have to start paying wealth tax.
- In general, when you have a double nationality, you will not have to pay wealth tax over all your assets when you are located abroad for more than 183 days of the year.
Exemptions for non-resident wealth tax in Spain
For non-residents, there is only an individual deduction of €700,000 on the Spanish wealth tax.
Residents in Spain and Wealth tax
If you are living in Spain as a resident for tax purposes, you will be taxed on your worldwide assets that are valued at over €700.000. This means that on top of your assets located in Spain, the value of all your assets will be included for wealth taxation purposes in Spain, which can lead to a significant overall tax increase. Situations where you will have to start paying wealth tax as a tax resident are:
- Staying 183 or longer in Spain
Exemptions for tax residents in Spain
There is a range of exemptions, and you can also claim a personal tax-free allowance that varies based on the region you live. Some exemptions include:
- Individual deductions on the national level are €700,000. However, autonomous regions can have a different rate. For example, the deduction in Catalonia is only €500,000.
- Married couples are entitled to individual deductions on their share of the main home owned, provided joint name ownership.
- You can get an allowance of up to €300,000 against the value of your primary home.
Therefore, in some cases, the homeownership and individual deductions combined allow married couples to have a total tax-free allowance of up to €2,000,000.
Bear in mind that tax treaties may be enacted with other countries if taxed elsewhere. For example, double taxation treaties are in place with the United States, Canada, and various countries throughout Europe.
If you would like to speak to me about wealth tax in Spain please email me at info@investmentsforexpats.com. I also cover pensions, investments and financial planning such as IHT.
