A certain percentage of your wealth is just handed over to the Spanish government every year. The wealth tax reduces the return to investing and discourages saving. Wealth taxes increase the incentive to move assets abroad as taxpayers try to keep their hard-earned money in their wallets, using various ways of tax planning.
As the Spanish tax system is quite complicated to understand for people without the necessary knowledge, expats living in Spain are advised to ask for help from professional financial advisers who will listen to their needs and design the right plan to help them save money in the process.
The Spanish government reintroduced wealth tax (impuesto sobre el patrimonio) in 2021, as it tried to collect funds to limit the consequences of the financial crisis that swept across the eurozone.
Wealth tax is based on your total asset value as of 31st December each year (the end of the Spanish tax year). The current tax-free allowance is €700,000 on your worldwide assets, including those in Spain. Spanish residents also get an additional €300,000 allowance for their main home in Spain.
For more information on wealth tax in Spain and the country’s different regions, you can download our comprehensive tax guide prepared by our tax experts. If you would like a hands-on approach, please fill in the contact form below and one of our experienced fully qualified advisers will get in touch with you to answer every question you might have.
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