Due to the financial/banking crisis worldwide, the Spanish government opted, in 2011, to re-introduce a wealth tax on net assets above €700,000 (£610,000), with a main home allowance of €300,000 (£260,000), although this is not relevant to holiday homes in some regions of Spain.
“Holiday-home owners in regions like Catalonia, Andalucia, The Valencian Community, The Balearics and The Canaries – basically the most popular regions with foreign buyers – will have to pay partimonio [wealth tax] on all net assets above €108,200 [£95,000], unless autonomous governments reform their tax codes before the end of the year,” said Mark Stucklin of Spanish Property Insight.
This is now : Wealth tax is an annual tax, payable on the total value of your taxable assets as at 31st December. If you are resident in Spain you are liable to the tax on your worldwide assets; if non-resident, then only on your Spanish assets.
Each resident individual has a tax free allowance of €700,000 (€800,000 in Isla Baleares and €500,000 in Cataluña), plus a €300,000 allowance on his own home. If a couple owns a property in joint names, each gets the €300,000 allowance.
Non-residents receive the individual allowance of €700,000, but no allowance against their Spanish property.
The state progressive state tax rates range from 0.2% for assets up to €167,129, to 2.5% on assets over €10,695,996. The Autonomous Communities can vary these rates, and the top rate is 3.03% in Andalucía, 3% in Murcia and 2.75% in Cataluña.
The tax is payable on the value of most of your assets, such as real estate, savings and investments, jewelry, art, cars, boats etc.
Some assets are exempt from wealth tax, such as household contents (but excluding jewels, fur coats, vehicles, boats, art and antiques); pension rights (but not purchased annuities); owner managed small businesses and business assets (with conditions). Certain shareholdings are exempt where you carry out managerial duties and derive a salary.
Loans are deductible in calculating your net taxable wealth provided they were not used to buy or invest in assets exempt from Spanish wealth tax.
The wealth tax was abolished in 2008, but the Spanish government felt it was necessary to re-launch it to generate greater revenue from the middle classes with a tax on property and savings, in a bid to help the country’s struggling economy.
As from 2012 it was enforced merely as a “temporary” measure lasting only two years and was to affec an estimated 160,000 taxpayers. In Spain temporary legal measures have been known to last over a century, so I advise this is taken with a pinch of salt. Wealth tax itself was formally introduced in 1977 as a temporary tax and has been going on strong for over three decades now; the irony.