Spain Wealth Tax

Spain Wealth Tax - Impuesto Extraordinario sobre el Patrimonio

Spanish wealth tax, known to many expats as simply ‘patrimonio’, was originally in place fundamentally to tax residents and non-residents alike on a yearly basis based upon how much you were worth. This was stopped in 2008 but was then reintroduced again in 2011.

Basics of Spanish Wealth Tax (correct as at June 2015)

There is a difference between being a resident and a non-resident.

If you are resident you have an allowance, National tax-free wealth tax allowance of €700,000 on top of that you have then have as a resident an additional wealth tax allowance for your main home your property of €300,000 (€150,000 each for married couple). What this means is that if you're worth less than €700,000 in investments and your jointly owned home is worth less than €300,000 then there is no tax to pay. Clearly, if either elements are worth more than the allowance then there is a yearly wealth tax to pay.

If you are non-resident, you still hav the normal allowance of €700,000 but you do not qualify for the €300,000 property allowance. This is because it's likely to be your holiday home or second home, investment property. This means it is an investment. Therefore, you are not entitled to €300,000 property allowance and you will pay wealth tax on the value of the property.

How does the tax authority know? How does the Tributaria find out?

You are required to make a voluntary disclosure of all assets in Spain, which let’s face the Tributaria already know you have property or that you have investments and bank counts in Spain. Residents must declare all worldwide assets including stocks, cars, yachts, jewels, works of art in addition to property. This is not just a money and property tax.

In addition, residents are required to complete form 70 (Model 70) we call it the ‘nosey’ form disclosing all investments outside of Spain. The Tributaria require us disclose all types of investment that are worth €50,000 or more collectively. For example, if you are a British Expat living in Spain and you have two offshore investment bonds worth €30,000 each, this is €60,000 in total in offshore bonds, it is over €50,000 so you much disclose them. Our, as ever, is failing to disclose any investment is fraud, so disclose it all anyway. If you do not and you get caught, then there will be no sympathy, particularly from the Tributaria. Even if no tax is due because you are below the annual allowance of €700,000, you must still disclose these investments. We are guessing that by being ‘nosey’ today, gives them the information to be able to change tax laws, reduce allowances and tax you when they are ready.

What are the Wealth Tax Rates?

Wealth tax is calculated in tiers. Starting at 0.2% and rising to over 3% in some regions.

Andalucia Wealth Tax Table

Within/below allowances = 0%, then balance above allowances

€0 to €167,129 = 0.20%

€167,130 to €334,253 = 0.30%

€334,254 to €716,581 = 0.50%

€716,582 to €1,337,000 = 0.90%

€1,337,000 to €2,673,999 = 1.30%

€2,674,000 to €5,347,997 = 1.70%

€5,347,998 to €10,695,995 = 2.10%

Excess over €10,695,995 = 2.50%

These rates can vary depending upon your automonous regions. The above example is for Andalucia, rates for Alicante or Murcia etc. are different. Rates, as you can see gradually rise in teirs all the way up to €10 million +. Do not forget, this is an yearly tax.

Do not forget, non-residents to get the €150,000 (€300,000 married couple) allowance for property as it is not you main home, so you will pay tax.

If you own a small holiday home in Spain, then ‘patrimonio’ Wealth Tax will not be a deal breaker, but if you are resident and a multi-millionaire, wealth tax bills can be severe.