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Even if you do not reside in Spanish territory, there are taxes in Spain that must be paid under certain circumstances. Among the taxes on non-residents found in the Spanish tax system is the Wealth Tax.
What is Wealth Tax
Wealth tax is levied on the net wealth of individuals.
Net assets means all assets and rights that have economic substance, less any charges and encumbrances, such as debts and obligations to be fulfilled that are directly related to those assets and rights.
It is a direct and personal tax levied individually on the personal wealth of individuals, regardless of the level of annual or monthly income received.
It is a state tax, established and regulated by the State, the total yield of which is ceded to the Autonomous Communities, as well as certain regulatory powers.
Chargeability of Wealth Tax to non-residents
Individuals who are resident in Spain have a personal obligation to apply the tax. Non-residents, on the other hand, have a real obligation.
The difference lies in the fact that residents with a personal obligation declare all the assets in their estate and the real obligation to contribute obliges non-residents to a partial taxation.
The tax is levied on the total net assets corresponding to the assets which are situated, could be exercised or have to be exercised in Spanish territory.
As regards deductions, only charges affecting assets and rights located or exercised in Spain or debts for capital invested in them may be applied.
Non-residents with a real obligation to contribute will apply the minimum exemption of 700,000 euros.
Wealth Tax Return by non-residents
The obligation to file a tax return arises in the following cases:
- When the calculation of the return results in a deposit.
- When, even if the result is not payable, the value of the assets or rights, without taking into account debts and charges that reduce the value, exceeds two million euros.
The tax is due on 31 December of each year and is levied on the assets existing at that date.
In addition, wealth tax has no tax period, so if the person dies on another day it does not accrue.
The tax return form is D-714 and the deadline for filing is the same for residents and non-residents and in 2023 it will be between 11 April and 30 June. It must be filed electronically via the Internet. To do so, it is necessary to have an electronic certificate, electronic ID card, Cl@vePIN or reference number.
The amount to be paid depends on the taxable base, as there is a scale with a tax payable depending on the taxable base.
How to calculate wealth tax for non-residents
The taxable base for wealth tax is calculated by adding up all the assets and rights located or exercised in Spanish territory and subtracting the debts accumulated by the taxpayer during the year in relation to the aforementioned assets and rights.
The exempt 700,000 euros are subtracted from the result obtained from the above operation. If the result is positive, the following scale will be applied depending on the amount of the base:
- Up to 167,129.45 euros: 0.2.
- Up to 334,246.87 euros: 0.5.
- Up to 668,499.76 euros: 0.9.
- Up to 1,336,999.50 euros: 1.3.
- Up to 2,673,999.02 euros: 1.7.
- Up to 5,347,998.03 euros: 2.1.
- Plus: 2.5.
Competent authority for wealth taxation of non-residents
Wealth Tax is a tax that is devolved to the Autonomous Communities. In the case of residents in Spain, it will be managed by one or the other depending on the place where they usually live.
Non-residents do not live in any of the Autonomous Communities, so the competent body for collecting the tax is the Central State Administration, i.e. the State Tax Administration Agency. Wealth Tax is a direct and personal tax levied on the wealth of individuals, both residents and non-residents. It must be filed when the result of the tax return is positive or when the assets included in the taxpayer’s wealth exceed two million euros. It is due on 31 December and is calculated by subtracting the charges from the assets of the estate and, after applying the exemption of 700,000 euros, making the taxation scale effective.
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