The answer is a conditional "yes" as there are certain holding structures which remove certain assets from the Spanish wealth tax regime or 'Patrimonio'. The tax applies to the ownership of assets less any allowable charges or debts. Therefore wealth tax is calculated on the net wealth of an individual. Assets liable to the tax include immoveable property, cars, cash, shares, jewelry etc; things allowed to reduce this include mortgages, charges and loans. Following are the national rules. The autonomies have the power to amend allowances etc.
The valuation of property for wealth tax purposes is based on the higher of; a) The cadastral value (rateable value) or b) The acquisition cost (as declared on the "escritura" title deed).
Official Valuation undertaken by the Tax authorities
There are special rules for valuing bank balances as well as other assets. Residency affects the scope of wealth tax, residents and non residents are taxed as follows;
Spanish tax residents are liable to wealth tax on their worldwide assets. They also benefit from the following allowances: General allowance €700,000 (€500,000 in Catalonia). This allowance is available to reduce all net assets liable to wealth tax Habitual residence €300,000. This allowance is available against your main residence in Spain and is in addition to the general allowance. If you have a business then there is an allowance which effectively excludes the value of the business subject to certain conditions such as the business being your main source of income. Wealth tax payable can also be capped subject to certain conditions (i.e. wealth tax plus income tax cannot exceed 60% of taxable income). There are legal ways of mitigating wealth tax in Spain - please contact us for more information.
Non Spanish Residents
Non Spanish residents are liable to wealth tax solely on assets located in Spain. They only benefit from the €700,000 allowance as their main residence will be outside Spain. Contact us for further information.
Patrick Macdonald ASCI
International Financial Adviser
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