Spain Non Resident Wealth Tax?
The Spanish tax regulations state that cumulative wealth and income taxes cannot exceed 60% of a resident’s total taxable income ( there is no limit for non-residents ), subject to a minimum of 20% of the wealth tax calculation.
Do you pay tax on savings in Spain?
Spanish tax on income from savings – As previously stated, if you are a Spanish resident you will be taxed on your worldwide income from your savings, regardless where the savings are based. Your savings income includes any income from:
- Interesting from savings
- Dividend payments
- Income from life assurance policies
- Income from annuities
- Gains made from the disposal or transfer of assets
These Spanish tax rates on savings income are as follows from 2021
- Spanish tax rate on savings income up to €6,000: 19%
- Spanish tax rate on savings income from €6,000 to €50,000: 21%
- Spanish tax rate on savings income from €50,000 to €200,000: 23%
- Spanish tax rate on savings income over €200,000: 26%
What is included in Spanish wealth tax?
Wealth Tax in Spain – Spanish wealth tax is payable by residents and non-residents alike on worldwide assets. One can plan around and mitigate this tax as there are certain holding structures and circumstances which remove certain assets from the Spanish wealth tax regime or ‘impuesto de patrimonio’.
But first. What is wealth tax? A somewhat controversial tax, opposed by many, that places an extra liability on residents and non residents alike – over and above their normal tax obligations. For residents, this tax applies to the ownership of world wide assets less any allowable charges or debts.
Therefore wealth tax is calculated on the net wealth of an individual. For non residents it is only applicable to assets held in Spain. Assets liable to the tax include immovable property, cars, cash, shares, jewelry etc. There is an allowance for mortgages, charges and loans.
Below are the national rules. The autonomous regions have the power to amend allowances but only for residents. Non residents with assets in Spain are subject to the national rates. Property The valuation of property for wealth tax purposes is based on the higher of; a) The cadastral value (ratable value) or b) The acquisition cost (as declared on the “escritura” title deed).
Official Valuation undertaken by the Tax authorities There are special rules for valuing bank balances as well as other assets. Residency affects the scope of wealth tax. Residents and non residents are taxed as follows; Residents Spanish tax residents are liable to wealth tax on their worldwide assets.
- They also benefit from the following allowances: General allowance €700,000 (€500,000 in Catalonia);
- This allowance is available to reduce all net assets liable to wealth tax;
- Habitual residence €300,000;
- These allowances can effectively be doubled for a married couple – including the main residence allowance;
This allowance is available against your main residence in Spain and is in addition to the general allowance. If you have a business then there is an allowance which effectively excludes the value of the business subject to certain conditions such as the business being your main source of income.
BUT here is the good news – You can mitigate or avoid wealth tax on your assets by using the following; 1. The 60% Rule Wealth tax payable is capped subject to certain conditions – the main one being wealth tax plus income tax cannot exceed 60% of your overall combined taxable income. Read more about this rule here 2. Pensions ****IMPORTANT UPDATE July 2022***** Law 12/2022, of June 30 2022, regulating pensions in Spain has now been passed into legislation. This modifies the Law approved by Royal Legislative Decree 1/2002, of November 29, by introducing the following changes to (amongst other things) Wealth Tax in Spain: The law has been modified to equate the tax treatment of pan-European (EU) individual pension products to that of pension plans in Spain.
Non Spanish Residents Non Spanish residents are liable to wealth tax solely on assets located in Spain. They only benefit from the €700,000 allowance as their main residence will be outside Spain. This change is great news for Spanish taxpayers who have (or are thinking of setting up/transferring in to) pension plans elsewhere within the EU, given that, to date, the rights consolidated in foreign pension schemes could not benefit from this exemption to Wealth Tax.
This change eliminates the existing discrimination in relation to the tax treatment applicable to pension plans set up in other EU countries. This will benefit all ex patriots who reside in Spain and who have consolidated rights in QROPS or QNUPS pension plans in Malta for instance.
- Other potentially exempt assets Household contents (excluding jewels, fur coats, vehicles, boats, art, and antiques), owner managed small businesses, family companies meeting certain conditions, intellectual property rights, and business assets where the activity is the taxpayer’s main source of income and the activity is carried out by the taxpayer on his own account and on a habitual basis;
Company shares held by an individual are also exempt from wealth tax provided: 1. the company is a currently trading company 2. you own at least 5% of the share capital (or at least 20% including share holdings belonging to a spouse or other family members) 3. Patrick Macdonald ASCI International Financial Adviser
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Can a non resident buy a car in Spain?
After spending a lot of time in Spain, many people think about buying a car. Spanish law allows foreign nationals, both residents and non-residents, to purchase a car in the country. According to the General Directorate of Traffic, about 861,000 cars were sold in Spain between January and December 2021. The market is full of dealers offering various new and used cars.