The New Solidarity Tax
The text of the new Solidarity Tax on Great Fortunes presented on November 10th, 2022, is published. This new tax could enter into force before December 31st, 2022 and expects to raise to 1,500 million euros according to government estimations.
The new tax has two objectives: to increase income by demanding an effort from taxpayers with a greater economic capacity to face the current situation of the energy crisis and inflation and to match property taxation in the different autonomous communities.
Taxpayers living outside the European Union must appoint a representative in Spain. This obligation also applies to resident taxpayers who, after the accrual and before filing the self-assessment tax return, are absent from Spain and do not return until after the end of the tax return period.
Amendment:
- The wealth tax rules will apply when it comes to determining who the taxpayer is, which exemptions apply and what the tax base is.
- In the case of resident taxpayers, the tax base will be reduced, in the form of an allowance, by €700,000.
- The tax will be levied on net worth, considering exemptions, that exceeds €3,000,000 according to the following scale:
- from 3 to 5 million euros: 1,7%
- from 5 to 10 million euros: 2,1%
- Over 10 million euros: 3,5%
- Taxpayers will be able to apply an overall limit similar to the limit that already exists for personal income tax and wealth tax payable. Specifically, where the sum of the amounts of gross tax payable in respect of personal income tax, wealth tax, and Solidarity Tax exceeds 60% of taxable income for personal income tax purposes
- Taxes paid abroad will be deductible on the terms of the wealth tax legislation in the case of resident taxpayers and without prejudice to the provisions of international treaties or conventions.
- The tax will fall due on December 31 of each year and will be claimed using a self-assessment, which must be filed when it results in tax payable. The Ministry of Finance and Public Service will regulate the filing period.
Personal Income tax
For resident taxpayers, the same existing 60% limitation rule between wealth tax and personal income tax will apply to solidarity tax. Therefore, the aggregate final liability for wealth tax, personal income tax, and solidarity tax may not exceed 60% of the personal income tax base. In case of excess, the wealth tax and solidarity tax contributions must be reduced by a maximum amount of 80%. Therefore, by application of this limit, there will always be a minimum taxation of 20% for both taxes.
Sources
The text of the new Solidarity Tax is published and will apply to assets held as of December 31, 2022. (2022, November 11). Garrigues. https://www.garrigues.com/en_GB/new/text-new-solidarity-tax-published-and-will-apply-assets-held-december-31-2022
Arregui, J. I. T. G. (2022, October 10). Spanish tax measures 2023: the new “Solidarity” Wealth Tax for high-net-worth individuals. Passle. https://www.europeantax.blog/post/102hyq7/spanish-tax-measures-2023-the-new-solidarity-wealth-tax-for-high-net-worth-ind
Spain publishes bill on “solidarity tax on large fortunes” | Osborne Clarke. (n.d.). https://www.osborneclarke.com/insights/spain-publishes-bill-solidarity-tax-large-fortunes
