The Wealth Tax (Impuesto sobre el Patrimonio, IP) is a tax levied on the net wealth of individuals. Net wealth is considered to be the total assets and rights owned by an individual, minus debts and other liabilities.
It is a tax that includes significant exemptions, including:
- Primary residence (up to a maximum amount of €300,000)
- Works of art and antiques
- Personal and household effects (except jewelry, vehicles, boats, and aircraft)
- Balances in pension plans
- Certain assets and rights necessary for carrying out business or professional activities
Individuals who are tax residents in Spain are taxed on a personal obligation basis, meaning on their total worldwide net wealth, regardless of where the assets and rights are located.
Non-residents are taxed on a real obligation basis, meaning only their net wealth located in Spain is subject to the tax. This also applies to individuals under the special expatriate regime (the Beckham Law).
This tax is administered by the autonomous communities, so the rules vary significantly depending on where your habitual residence is. This affects the exempt threshold (the amount of net wealth above which you must pay the tax).
In general, if regional rules do not specify otherwise, the exempt threshold is €700,000. There are notable differences between regions, for example: in the Balearic Islands the threshold is €3 million, in Valencia or Catalonia €500,000, and in Madrid there is a 100% deduction, so nothing is paid.
The tax is filed using Form 714.
How is the tax calculated?
First, the assets and rights that make up the gross wealth are valued, including real estate, balances in checking and savings accounts, shares, investment fund holdings, crypto assets, options, vehicles, jewelry, boats, aircraft, etc.
Each type of asset has specific valuation rules established by law. From the gross wealth, deductible debts linked to the assets and rights are subtracted to obtain the net wealth.
Next, the exempt thresholds are applied, and a progressive scale is applied to the remaining amount, ranging from 0.2% to 3.5%.
Example:
A tax resident in Cantabria has the following assets:
- 4 properties, each valued at €500,000, each with a mortgage of €100,000
- 3 cars, each valued at €50,000
- 1 boat, valued at €80,000
- Investment fund balances totaling €250,000
Gross wealth: €2,480,000
Net wealth: €2,480,000 – €400,000 = €2,080,000
The exempt threshold in Cantabria is €700,000, so the net wealth subject to the tax is €1,380,000. Applying the tax scale:
Taxable base (up to) | Tax due (€) | Remaining base (up to) | Rate (%) |
0.00 | 0.00 | 167,129.45 | 0.2 |
167,129.45 | 334.26 | 167,123.43 | 0.3 |
334,252.88 | 835.63 | 334,246.87 | 0.5 |
668,499.75 | 2,506.86 | 668,499.76 | 0.9 |
1,336,999.51 | 8,523.36 | 1,336,999.50 | 1.3 |
2,673,999.01 | 25,904.35 | 2,673,999.02 | 1.7 |
5,347,998.03 | 71,362.33 | 5,347,998.03 | 2.1 |
10,695,996.06 | – | onwards | 3.5 |
Applying each bracket results in a tax due of approximately €9,082.37.