Tax and Legal Newsletter 12/2022

Daya

Tax and Legal Newsletter 12/2022

New Solidarity Tax on Major Fortunes in Spain

On November 10, the parliamentary groups holding the government filed an amendment to the bill currently in Parliamentary discussion for the establishment of temporary energy taxes and taxes on credit institutions and financial credit establishments, that would create a new Solidarity Tax on Major Fortunes.

The new tax is therefore expected to enter into force before 31 December and would accordingly apply to the current year 2022.

This State tax is levied on the wealth of resident individuals on their worldwide net-worth and to non-residents and to individuals under the special tax regime for posted workers, on their Spanish based net assets, provided that the value of their net worth exceeds € 3 million, on top of a minimum exempt amount of €700,000.

The rules on the taxable event, taxable base and exemptions are directly those foreseen in the current Wealth tax Act. Therefore, as in Wealth Tax, the personal dwelling, and the shares of the so-called «family business» may be exempt.

The amount actually paid for Wealth Tax will be deducted from the amount to be paid for this new tax.

The tax rates are as follows:

Net base
Up to Euro 
Quota
Euro
Rest of the net base
Up to Euro
Applicable Rate
Percentage
0,00 0,00 3.000.000,00 0,00
3.000.000,00 0,00 2.347.998,03 1,7
5.347.998,03 39.915,97 5.347.998,03 2,1
10.695.996,06 152.223,93 En adelante 3,5

The full amount of this tax, together with the amounts of Personal Income Tax and Wealth Tax, may not exceed, for taxpayers subject to the tax by personal liability, 60% of the sum of the taxable bases of the former. For these purposes, the rules on the limit of the full amount of Wealth Tax, established in Law 19/1991, of 6 June, on Wealth Tax, shall be applicable.

The maximum reduction of the tax is limited to 80 per cent of its initial tax liability.

Persons who are not obliged to pay any amount for this new tax will not require to file a tax return.

Non-residents subject to the solidarity tax will have to appoint a tax representative in Spain in some cases.

Modification to the Wealth Tax Law:

This amendment also includes a modification to the Wealth Tax Law, establishing that are deemed to be in Spain the shares of any entity (foreign or local) when at least 50% of its assets are directly or indirectly made up of real estate located in Spain. Accordingly, they will be subject to taxation even when the owner is a non-resident individual.

For calculating the value of the underlying assets, the Spanish located properties should be valued at the highest of the following values: acquisition value, cadastral value or value ascertained by the Administration. The “reference value” will be considered as ascertained one only on those properties acquired since 2022.

In short, the new measures affect those individuals who could apply the regional exemptions on net worth tax and those who own property in Spain through non-resident companies.

Madrid, November 11, 2022