Revelation of the new Solidarity Tax's details, which will apply in respect of the assets a person owns on 31st of December of each year, including the financial year 2022.
On 10th of November, amendments were tabled to the Proposed Law for the establishment of temporary taxes on energy and credit institutions and financial credit establishments. One of these amendments proposes the regulation of the Solidarity Tax.
As previously published, this is a tax that will coexist with the Wealth Tax, complementing it. The aim is to harmonise the taxation of wealth held by individuals throughout Spain, regardless of the autonomous community in which they reside.
The proposed amendment specifies the following:
The provisions of the Wealth Tax Law for the determination of taxpayers and the taxable base, as well as the cases of exemption, will be extended to the Solidarity Tax. This resolves one of the main concerns of taxpayers in the sense that very important exemptions such as those relating to habitual residence and family business will be taken into account in this new tax.
In addition to the exemptions corresponding to each type of asset, a minimum exemption of 700,000 euros is established, which coincides with the minimum exemption in force in most Autonomous Communities - also in the state regime - in relation to Wealth Tax (in Catalonia, this minimum exemption in Wealth Tax is 500,000 euros).
Update 30-12-2023: the minimum exemption in the Balearic Islands, from 2024, is set at 3 million euros.
The tax rates, which will be applied to the amount of wealth after reduction of the applicable exemptions and reductions (taxable base), is as follows:
Taxable base - Up to (euro) | Tax - Euro | Rest of taxable base - Up to (euro) | Tax 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 |
Another important aspect is that it is envisaged a joint limit similar to that currently existing that considers the tax liability of the Personal Income Tax (PIT) and Wealth Tax (WT).
In the case of a personal obligation to contribute (mainly for residents in Spain), taxes paid abroad can be deducted in the same way as they can be deducted for Wealth Tax. The tax liability for Wealth Tax will also be deducted from the Solidarity Tax.
The accrual of the Solidarity Tax will coincide with that of the Wealth Tax, i.e. it will be 31 December of each year. The deadline for filing the tax return will be regulated by the Ministry of Finance and Public Administration, although it is expected to be the same as for Wealth Tax: until 30th of June.
Finally, the amendment establishes other aspects relating to the appointment of a representative in Spain for taxpayers resident outside the European Union (EU) or the European Economic Area (EEA), as well as for those resident in Spain who are absent to a State outside the EU or the EEA, if their return to Spain is expected to take place after the end of the deadline for filing the Solidarity Tax return, and provided that the absence has occurred after the accrual of this new Tax has taken place.
As can be seen, the Solidarity Tax will only affect those taxpayers with a net taxable base of more than 3 million euros.
In fact, depending on the Wealth Tax rates set in each Autonomous Community, in practice it will only affect those with a net taxable base above certain amounts.
By way of example, in Catalonia it will affect taxpayers with a net taxable base of around 16,120,000 euros or more. In contrast, in the Balearic Islands the margin is much wider, due to the fact that the Wealth Tax rates in this community are considerably higher. Specifically, in the Mediterranean islands it will only affect taxpayers with a net taxable income of approximately 210,000,000 euros or more.
If you have any further questions, please do not hesitate to contact us.
Balagué-Sala Lawyers