Spain: Extension to nonresidents of wealth tax liability limitation based on income (Supreme Court decisions)
Limiting to residents breaches principle of free movement of capital
The Supreme Court held in judgments of October 29, 2025 (ECLI:ES:TS:2025:4849) and November 3, 2025 (ECLI:ES:TS:2025:4846), that nonresidents are allowed to limit their wealth tax liability based on their income, thereby equating them to Spanish residents.
The court found that limiting the application of the combined limit on wealth tax and individual (personal) income tax liabilities (such that the sum of both cannot exceed 60% of taxable income for individual income tax purposes) solely to residents breaches the principle of free movement of capital recognized in Article 63 of the Treaty on the Functioning of the European Union.
Read a November 2025 report prepared by the KPMG member firm in Spain