SIREJACOB LEGAL & TAX
Sirejacob Legal & Tax, Advises on Non-Resident Wealth Tax In Spain
Spain reintroduced in 2011 the Wealth tax, which had been abolished before the crisis. This reintroduction applied to 2 years but has finally been extended to 2014. This implies that until 2015 this tax declaration has to be filed.
When does Wealth Tax apply?
The wealth tax applies on all possessions that are owned in Spain. The tax is based on the total amount of possessions such as moveable (shares, jewelry, cars etc) as well as immovable (land, property etc). If you are a resident in Spain, then the regional government (Comunidad Autonoma) will tax you on your worldwide possessions. On the other hand, a non-resident will be obliged to pay on what he owns in Spain.
On which tax base will you be taxed?
A non-resident is only obliged to file a declaration on the possessions located in Spain (unlike a resident where it applies on the worldwide capital). This means that you will be taxed on the total of immovable assets (your holiday home) and moveable assets (your bank account in Spain).Beware this applies only for a natural person and not for a company. A company does not have to pay Wealth Tax.
How will your property be valued?
The law regulates this in detail, such as the following examples:
Immovable assets (such as land and property) are estimated based on 3 significant values; the cadastral value, the minimum tax value and the purchase price. The highest of these three values is the decisive amount when having to be valued.
This does lead to unusual situations as two different owners can own a similar apartment in the same apartment complex and still pay different amounts. A good example is when someone bought in 2007 and their neighbor has bought the same apartment but in 2014 for a much lower price, they will both have a different tax base. Someone who bought his property at prices of 2007 will still be penalized by having to pay more Wealth tax.
Moveable goods are very diverse. The value of a bank account will be your state on the 31/12, except if it is lower than the average amount of the last trimester. If this is the case than the average amount is used to decide the value.
Cars are valued in accordance to market value. The official market value is published yearly by the Spanish Tax office.
Are there are exemptions for non-residents?
Yes, luckily there are some exemptions. Each non-resident has a general reduction of 700.000 EUR. Spanish tax residents also benefit from an extra reduction of 300.000 EUR for their family home.
How much tax does a non- resident have to pay?
The following rate scale applies on the amount which exceeds the before mentioned exemptions. The following scale applies to non residents >
Do we have to file a tax declaration of my possessions in Spain do not exceed the tax minimum?
The Spanish tax administration waives your obligation to file a declaration in this case.
Sirejacob Legal & Tax, July 2014