Description
What is the wealth tax?
Wealth tax is a direct and personal tax which is applied individually, not on annual income or transactions, but on the personal assets of individuals, and is calculated on the basis of the value of all the taxable person's assets.
Wealth tax is payable on 31 December of each year and affects the assets owned by the taxpayer on that date.
Wealth tax is devolved to the autonomous communities, so that they can apply reductions in the minimum exemption, modify the rate and approve deductions and reductions in the tax liability.
How is Wealth Tax calculated?
As we said, Wealth Tax will depend on each autonomous community. At the state level, there are certain considerations to bear in mindsuch as:
- Exemption of EUR 300,000 for the taxpayer's principal residence.
- Exempt minimum of 700,000 euros for both resident and non-resident taxpayers.
- Obligation to file the declaration for taxpayers whose tax liability is to be paid or, if the value of the assets and rights exceeds 2,000,000 euros, not to be paid.
- Family businesses are exempt (business or professional) and holdings in entities that qualify as family undertakings.
Bearing in mind the above, the first thing we would have to do is to add up all our assets and rights. From this amount we would subtract up to 300,000 euros of the main residence (if the amount is less, the value of the home would be subtracted) and any debts we may have. As the minimum exemption is 700,000 euros, we calculate the taxable base by subtracting the 700,000 euros of the exemption from the net worth. The different rates by brackets will be applied to this net taxable base and then the corresponding allowances or reductions will be applied.
In the case of marriages in community of property, you would have to divide by two the assets you have in common and the deductions and minimums would be applied to that amount. In other words, if you have a property worth 400,000 euros in a community of property regime, the property to declare for each of you as a home would be 200,000 euros, so you would be exempt as it would not reach 300,000 euros.
State scale of wealth tax
The net tax base for Wealth Tax shall be taxed at the rates of the scale approved by the corresponding Autonomous Community. Failing that, it shall be taxed according to the following scale:
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