A new tax recently entered into force in Spain for fiscal years 2022 and 2023, called “Impuesto Temporal de Solidaridad de las Grandes Fortunas”.
The same rules must be applied to quantify the taxable base of the new tax (ISF) as those applied for the current Wealth Tax. That is, the taxable base of each taxpayer’s ISF is their net wealth as at 31 December of each year.
The same exemptions from the Wealth Tax are also applicable. Thus businesses, primary residences up to 300,000 euros and pension plans, for example, are not taxed under this new tax.
The new ISF applies to those whose net wealth (after applying the corresponding exemptions) is greater than three million euros, with a minimum exemption of 700,000 euros. Therefore, you will only be affected by this tax if you have a net worth of more than 3.7 million euros.
However, it is not only that your net assets must exceed the above figures to be obliged to declare, but your final tax liability, after deductions, must also be greater than zero euros. Otherwise, there is no obligation to declare.
The full amount of the ISF is calculated by applying the following rate to the taxable base (the taxable base minus the minimum exemption of 700,000 euros):
From 3,000,000 to 5,347,998 euros 1.7%
From 5,347,998 to 10,695,996 euros 2.1%
10,695,996 euros and over 3.5%
Once the total tax liability has been calculated, similar taxes paid outside Spain can be deducted, as well as the Wealth Tax paid for the same year.
As Spain has 17 different regions, some of them are more affected by this new Solidarity Tax than others, so please check with your tax advisor or any of the ‘Lexunion Spain’ member firms.
Author: Juan Pedro HOYA, Emin Legal, Barcelona