Spain: Wealth tax-related legislative proposals

The following wealth tax-related proposals were presented to Parliament on 10 November 2022:

• Introduction of a new temporary solidarity tax on large fortunes
• Amendment to the wealth tax for non-residents who are indirect owners of property in Spain

The new temporary solidarity tax on large fortunes (ITSGF) would supplement the current wealth tax and be an additional tax levied at the central government level on individuals that have net assets of more than €3 million (calculated as of 31 December each year) at the following rates:

• 1.7% on net assets between €3 million and €5,347,998
• 2.1% on net assets between €5,347,998 and €10,695,996
• 3.5% on net assets of more than €10,695,996

As with wealth tax, ITSGF will be payable by Spanish residents in respect of their worldwide wealth, and by non-residents in respect of any wealth located, or related rights that may be exercised or fulfilled, in Spain.

Assets and rights that are exempt from wealth tax would also be exempt from ITSGF, such as:

• Family businesses
• Permanent residences (up to €300,000)
• Vested rights in certain welfare schemes (pension plans, insured pension plans, corporate employee welfare plans, pan-European individual pension products, etc.)
• Assets forming part of Spanish or regional historical heritage, and certain art objects and antiques
• Household effects
• For non-residents, securities the returns on which are exempt from non-resident income tax (e.g., fixed income securities for EU residents)

ITSGF would be a temporary tax applicable in the first two years in which it becomes effective. If it is passed by 30 December 2022, it will be effective for 2022. After being effective for those two years, the government would evaluate the impact of the tax and propose that it either remain effective or be dropped.

The amendment to the wealth tax for non-residents who are indirect owners of property in Spain would deem securities representing holdings in the equity of any kind of entity (not traded on organised markets) to be located in Spain where at least 50% of the relevant assets consist, either directly or indirectly, of real estate assets located in Spain.

A number of income tax treaties signed by Spain (e.g., those with Germany, Saudi Arabia, Armenia, Egypt, Slovenia, France, Georgia, India, Iceland, Israel, Kazakhstan, Kuwait, Luxembourg, Mexico, Moldova, Norway, Panama, United Kingdom, South Africa, Uruguay and Uzbekistan) contain a provision regarding wealth tax on indirect real estate holdings, which grants sovereignty to tax the indirect ownership of real estate to the country in which the property is located. The interaction between the proposed amendment and any applicable income tax treaty would need to be examined on a case-by-case basis.

Read a November 2022 report [PDF 564 KB] prepared by the KPMG member firm in Spain