The recent euphoria surrounding the decision of the Regional Government of Andalucía to repeal Wealth Tax (“WT”) by applying an allowance of 100% in respect of any WT payable in Andalucía has been short-lived. No sooner had the President of the Junta de Andalucía communicated his decision to repeal WT in Andalucía, than the Central Government announced a series of new tax measures in its Budget for 2023, including a new WT (the so-called “Solidarity Tax on Large Fortunes” – (“the new WTLF”). In doing so, the Central Government pretends to bring about a certain degree of harmonisation as between Spain’s different autonomous communities in relation to the tax treatment of taxpayers.
The new WTLF will apply to individuals whose net wealth exceeds € 3M at the following rates:
|Net Wealth||Tax Wealth|
|€3M to €5M||1.7%|
|€5m to €10M||2.1%|
|In excess of €10M||3.5%|
By way of example, assuming a net wealth of € 11M, the new tax will apply as follows:
|Net Wealth||Tax Rate||Euros|
|€0.00 to €3M||No tax||€0.00|
|Next €2M (up to €5M)||1.7%||€34,000|
|Next €5M (up to €10M)||2.1%||€105,000|
|Next €1M (up to €11M)||3.5%||€35,000|
The new WTLF is intended to coexist with the WT applicable in the various autonomous communities by permitting the WT payable in the autonomous community to be deducted from the new WTLF. This effectively means that the new WTLF will be particularly hard felt in the autonomous communities where no WT is currently payable (e.g., Madrid and Andalucía), since there will no local WT payable to be deducted.
The autonomous communities of Madrid and Andalucía have already announced that they will lodge an appeal against the new WTLF before the Spanish Constitutional Court.
The new WTLF is intended to come into force on 1 January 2023 and will initially apply for the 2023 and 2024 tax years. However, it is possible that it could be renewed thereafter for successive tax years.
Increased rates for savings income/capital gains
In addition, the Central Government has increased the rates applicable to savings income/capital gains (“rentas del ahorro”) by introducing a new rate of tax for savings income/capital gains in excess of € 300,000 at 28%.
The current rate applicable to savings income/capital gains between € 200,000 – € 300,000 will also increase from 26% to 27%.
For further advice and assistance, please contact us.