The Wealth Tax applies to the net wealth of individuals, including those who are not residents in Spanish territory, provided they own assets or rights located in Spain. In this case, the tax obligation is real, meaning it only affects assets and rights located in Spain and not the taxpayer’s global wealth.
The Wealth Tax is levied on the net assets of individuals, including those who are not residents in Spain but own assets or rights located within the country. This tax is assessed on December 31st each year and, in the case of non-residents, it applies only to assets located in Spain under a real obligation to contribute.
In this circular, we will detail the taxpayers affected, the applicable regulations, exemptions, the interaction with double taxation treaties, formal obligations, and other key issues that affect non-residents in the application of this tax.
Taxpayers: Real Obligation to Contribute
The Wealth Tax differentiates between resident and non-resident taxpayers. Non-residents are taxed under a real obligation, which means they are only required to declare assets and rights located in Spanish territory or those that produce effects in Spain.
Individuals subject to tax under the real obligation include:
- Non-resident individuals who own assets or rights in Spanish territory.
- Employees posted to Spain who opt for the special tax regime under Article 93 of the Personal Income Tax Law.
This regime, also known as the “Beckham Law,” allows workers who move to Spain to be taxed under the Non-Resident Income Tax (NRIT) instead of the Personal Income Tax (PIT) for a period of six years.
Requirements to qualify for the special regime:
- Not having been a tax resident in Spain in the last five years.
- Relocation to Spain due to a job offer or to serve as a director of a company.
- Apply for the regime within six months from the start of employment.
Effects on the Wealth Tax:
- They are taxed under the real obligation, meaning only on assets located in Spain.
- They may apply regional regulations regarding the Wealth Tax.
- Since 2023, the regime has been extended to include entrepreneurs, remote workers, and certain family members of the relocated employee.
Application of Regional Regulations
Since 2021, all non-residents can apply the tax rules approved by the Autonomous Community where the highest value of their assets in Spain is located. Previously, only residents of the European Union or European Economic Area had access to this benefit.
Practical implications:
- If the taxpayer owns assets in multiple Autonomous Communities, the rules of the region where the highest value of assets is located will apply.
- To apply regional regulations, it must be indicated in the tax return by marking the corresponding box.
Exemptions Applicable to Non-Residents
Non-residents may benefit from certain exemptions provided by the Wealth Tax law. These include:
- Spanish government bonds and fixed-income securities.
- Shares in foreign entities without a permanent establishment in Spain.
- Assets used for business or professional activities in Spain.
However, bank account balances held by non-residents are not exempt.
Double Taxation Treaties (DTTs)
Spain has signed numerous double taxation treaties which may limit the taxation of non-residents under the Wealth Tax.
Example: If a non-resident taxpayer owns shares in a Spanish company, but their country of residence has a DTT with Spain stating that such assets are only taxable in the country of residence, those shares would be exempt from Wealth Tax in Spain.
It is advisable to consult the applicable treaty in each case to determine the extent of the tax obligation.
Obligation to File a Tax Return
Non-residents must file a tax return if:
- They have a tax liability to pay after applying deductions and allowances.
- Their assets in Spain exceed €2,000,000, even if the final tax due is zero.
Form of submission:
- Form D-714.
- Mandatory online submission.
- Requires an electronic certificate, electronic ID (DNIe), Cl@ve PIN, or RENØ reference number.
Joint Liability and Tax Representation
Non-residents may be required to appoint a tax representative in Spain in the following cases:
- If they operate through a permanent establishment.
- If the Tax Administration deems it necessary due to the size of the assets.
Additionally, managers or custodians of assets owned by non-residents will be jointly liable for the payment of the tax if they manage or hold such assets in Spain.
Temporary Solidarity Tax on Large Fortunes (ITSGF)
Since 2023, the introduction of the ITSGF affects Autonomous Communities that apply a 100% rebate on the Wealth Tax, such as the Community of Madrid.
Key points:
- The 100% regional rebate on the Wealth Tax does not apply if the taxpayer is subject to the ITSGF.
- Taxpayers with net assets exceeding €3,700,000 are subject to the ITSGF.
- It does not affect individuals with wealth below this threshold.
Tax Planning Strategies for Non-Residents
To minimize the Wealth Tax burden, several strategies can be employed:
Asset structuring:
- Non-Artificial use of foreign companies to manage assets located in Spain.
- Shared ownership of real estate to dilute individual tax base.
Application of double taxation treaties:
- Identify assets that may be exempt from taxation in Spain under international treaties.
Use of regional regulations:
- Choose the Autonomous Community whose regulations offer the most favorable tax treatment.
Regular review of assets:
- Assess asset composition annually to take advantage of current exemptions and tax benefits.
The Wealth Tax for non-residents involves complexities that require careful tax planning. Choosing the applicable regional regulations, using double taxation treaties, and identifying exemptions can have a significant impact on tax liability.
Non-resident taxpayers are advised to review their wealth situation and, if in doubt, seek professional advice to optimize their tax position within the applicable legal framework.
Please feel free to contact this professional office for any questions or clarifications you may have.
Kind regards,
¿Tienes alguna duda sobre este tema?
Nuestro equipo de asesores expertos te ayudará a resolver cualquier problema relacionado con nuestros servicios.
Contactar ahora
A Àmbit Assessor, SL comptem amb 40 anys dedicats a l’assessoria fiscal, comptable i laboral de la Pime.
Latest posts by MGI Àmbit
(see all)
Relacionado
