Spain: An attractive country for investment
Setting up a business in Spain
Investment aid and incentives in Spain
Labor and social security regulations
Intellectual property law
Legal framework and tax implications of e-commerce in Spain
Company and Commercial Law
The Spanish financial system
Accounting and audit issues
- Central government taxes
- Corporate Income Tax
- Personal Income Tax
- Nonresident Income Tax
- Wealth Tax
- Inheritance and Gift Tax
- Spanish Value Added Tax
- Transfer and Stamp Tax
- Excise and Special Taxes
- Custom Duties on Imports
- Tax on Insurance Premiums
- Tax on Financial Transactions
- Tax on certain Digital Services
- Reporting obligations relating to Assets and Rights Abroad
- Tax on fluorinated greenhouse gases
- Excise tax on non-reusable plastic packaging
- Tax on waste sent to landfill, incineration and co-incineration
- Temporary taxes introduced by Law 38/2022 of December 27, 2022
- Special regime for startups
- Special Regimes of certain Autonomous Communities
- Local taxes
- Exhibit I - Corporate income tax incentives for investment
- Exhibit II - Treaty tax rates
- Exhibit III - Practical examples
- Exhibit IV - Case of Application of the Regime for foreign-securities holding companies (ETVE)...
- Exhibit V - Nonresident case study: Income obtained without a permanent establishment
- Exhibit VI - VAT case study
2Central government taxes
2.4 Wealth tax
Spanish resident individuals are subject to Wealth Tax on their total assets (located worldwide) at December 31 of each year, valued according to tax provisions. Nonresidents are taxed only on the assets located or the rights exercisable in Spain. However, some tax treaties can affect the application of this provision. A new provision applicable in 2023 stipulates that securities representing an ownership interest in entities not traded on organized markets whose assets are made up, by at least 50%, directly or indirectly, of real estate located in Spain, will be deemed located in this country.
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; vested rights of participants in pension plans and rights with economic content relating to similar social welfare systems; the work of an artist while it forms part of the artist’s assets; assets or rights necessary for the direct, personal and habitual performance of a business or professional activity which constitutes the taxpayer’s main source of income; and some holdings in the capital of certain entities (mainly family businesses). The taxpayer’s principal residence is also exempt, up to a maximum amount of €300,000. An exemption for economic rights deriving from contributions to individual pan-European pension products is another recent addition.
The law establishes different methods for valuing each type of asset.
With regard to the scale of rates established for this tax, in the absence of regulation by the autonomous community in question, the following tax rates will apply:
|Net taxable income (up to euros)||Tax payable (euros)||Rest of net taxable income (up to euros)||Tax rate applicable (%)|
These rates apply to residents on their worldwide assets, and to nonresidents on their assets or rights located or exercisable in Spain.
Moreover, in the absence of autonomous community regulations, the maximum exemption is €700,000.
The gross wealth tax payable, together with the PIT payable on the general component and the savings component of income, may not exceed, for resident taxpayers, 60% of their total taxable income subject to PIT. For this purpose, the following will not be taken into account: (i) the portion of savings income derived from capital gains and losses relating to the positive balance of gains obtained on transfers of assets acquired more than one year before transfer date, or the portion of gross personal income tax payable on that part of savings income, and (ii) the portion of wealth tax relating to assets which, because of their nature or use, are not capable of producing income taxed under the PIT Law.
If the sum of both taxes payable were to exceed the aforementioned limit, the wealth tax payable would be reduced to that limit, without that reduction exceeding 80%.
It is important to bear in mind that some autonomous communities have modified the exempt amounts while in others the tax is not payable (as in the Madrid autonomous community) because a 100% reduction applies.
However, there will be an obligation to file a tax return even if the tax payable is not positive, where the value of the assets or rights exceeds €2,000,000.
Due to the adaptation of the judgment of the Court of Justice of the European Union (“CJEU”), of 3 September 2014 (case C-127/12), the provision has been amended to establish that nonresident taxpayers, that are resident in a Member State of the EU or of the EEA, shall be entitled to apply the legislation approved by the autonomous community where the greatest value of their assets and rights are located and for which the tax is claimed, because they are located, can be exercised or must be fulfilled in Spain. For 2021 onwards, this right has also been extended to nonresident taxpayers from third States.