Spanish solidarity tax

If you pay the general wealth tax in the Balearics, you deduct this from your solidarity tax liability. | EUROPA PRESS

Cathal Rochford, Partner Blevins FranksPalma28/04/2023 15:28
TW
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The new ‘solidarity tax on large fortunes’ is a temporary tax and only imposed on very wealthy individuals, most people will not be affected.

Its purpose is to generate more revenue from taxpayers with greater economic capacity to help the government tackle the energy and inflationary crisis. It also harmonises the taxation of wealth across the different autonomous communities. Since it is a central state tax, the allowances and tax rates cannot be modified by the regional governments.

Solidarity tax applies to:

  • Spanish tax residents with worldwide net wealth above €3 million.
  • Non-tax residents with net Spanish assets above €3 million.

It applies for 2022 and 2023. After this it will be reviewed to decide about its application in future years.

If you have enough wealth to be liable to pay this tax, you will need make your first payment between April and June this year (2023), calculated on your wealth as at 31 December 2022.

Allowances and tax rates

This new tax works in the same way as the regular wealth tax. Spanish tax residents can reduce their general taxable base by €700,000, plus deduct up to €300,000 from the net value of the main home. Likewise, the same exemptions applicable to the regular wealth tax also apply to this tax with the same requirements, for example, the exemption on family businesses.

Since solidarity tax only applies to wealth above €3 million, in most cases only those with a net wealth higher than €4 million will have a tax liability. And this is per individual, so spouses/civil partners with joint assets each have their own allowances.

The tax rates are:

Up to €3,000,000 – 0%
€3,000,000 to €5,347,998 – 1.7%
€5,347,998 to €10,695,996 – 2.1%
Over €10,695,996 – 3.5%

If you pay the general wealth tax in the Balearics, you deduct this from your solidarity tax liability. You do not pay wealth tax twice.

If you are affected by this tax, you may be able to take steps to reduce your liability for 2023, in the same way that you can for the regular wealth tax. Seek personalised advice.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change.

Tax information has been summarised; individuals should seek personalised advice.

Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com