The super rich in Spain are generally subject to one of two headline taxes targeting wealth, depending on where they live. Although there are several smaller taxes they (and most people) also pay on top of those, today we’ll focus on the two big ones.

There’s the general wealth tax (known as el impuesto de patrimonio in Spanish) that is levied on net worth, and in recent years the Spanish government has also established the supposedly temporary (more on that below) ‘solidarity’ tax, which is known as the impuesto de solidaridad a las grandes fortunas and levied on the assets of millionaires.

You may also see it referred to as the ‘millionaire’s tax’ in Spanish media.

But what are the differences between the two? Who pays which one, and should you ever pay both?

READ ALSO: ‘Fewer Lamborghinis’: Spain’s PM aims to tax the super-rich more

Wealth tax

El impuesto de patrimonio – This is Spain’s standard wealth tax.

According to information from the Spanish treasury: “Wealth Tax is levied on the net wealth of individuals, i.e. all the assets and rights of economic content of which they are the owner, less any charges and encumbrances that reduce their value, as well as the debts and personal obligations for which the owner is liable.”

Generally speaking, people who are resident in Spain pay this tax, and those that at least have fiscal residency (spending at least 183 days here a year) meaning that Spain is one of the few countries who has a wealth tax on residents and non-residents alike.

Residents pay tax on all their wealth, whereas non-residents only pay it on any Spanish assets they have. 

Regional governments in Spain have the ability to set their own wealth taxes and create different deductions, therefore there is no one flat wealth tax rate across the whole country. Be sure to check your regional rules for a fuller picture of your tax obligations.

Generally speaking, however, it’s progressive and starts at 0.3 percent at the lower taxable bases, rising to 3.5 percent on fortunes over €10 million.

The Treasury also outlines some general criteria in the following situations:

1. “Those who, in accordance with the regulations for this tax and once the appropriate deductions or rebates have been applied, owe money, or for the purposes of applying the first limit, it should be borne in mind that if the taxable base, determined in accordance with the tax rules, is equal to or less than the exempt minimum established, either generally at €700,000, or in the amount that the Autonomous Communities have approved for their residents in the exercise of their regulatory powers over the aforementioned exempt minimum, there will be no obligation to file a tax return.”

2. “When the above does not apply, the value of their property or rights, determined in accordance with the tax regulations, is greater than €2,000,000. For the purposes of the application of this second limit, it includes all owned property and rights, whether or not they are exempt from the tax and calculated without considering any burdens or encumbrances that reduce their value or the personal obligations or debts for which the taxpayer is answerable.”

So, in short, if you have a taxable base of €700,000 or above (or whatever your regional base is) or property worth €2,000,000 or more, you’ll need to file a wealth tax return.

Solidarity tax

The other is Spain’s temporary tax on the super rich (impuesto de solidaridad a las grandes fortunas) which is usually referred to as the millionaire’s tax or solidarity tax. It’s a tax on people worth more than €3 million and it’s not a tax on income, but rather on assets and holdings.

All Spanish tax residents who have a net worth over €3 million must pay it. Be aware, it’s a tax on worldwide assets, not just what you own in Spain. It also applies to non-residents with Spanish assets above €3 million.

According to tax data, the millionaire’s tax targets just 12,010 payers, which represents barely 0.1 percent of the total taxpayer base in Spain. Unlike the normal wealth tax, Spain’s solidarity tax is levied on a national level. 

READ ALSO: Q&A: How does Spain’s solidarity tax on wealth work?

The tax is progressive, so you pay more tax the more wealth you have:

• 0 percent for the first €3 million (the taxable base)
• 1.7 percent between €3-€5 million
• 2.1 percent between €5-€10 million
• 3.5 percent for €10 million and above

It was introduced by the country’s left-wing coalition in 2022 in an attempt to help Spaniards weather the economic storm of the cost-of-living crisis. But as of September 2023, around a year after the tax measure was first brought in, the Spanish government reported that it had raised €623 million in revenue, a decent amount but considerably less than the initial projection of €1.5 billion. 

READ ALSO: How wealthy people in Spain are avoiding the millionaire tax

This seems to be because wealthy Spaniards and foreigners are finding creative ways to avoid paying it. This is mainly done through ‘donations’ in order to make the money non-taxable or to reduce the taxable base on paper.

Another method increasingly used by the wealthy seems to be setting up and putting money in venture capital or private equity firms.

According to Spain’s National Securities Market Commission, the creation of venture capital firms has grown by 38 percent since the government first announced the millionaire’s tax.

It was originally intended to be a temporary tax to combat the cost of living crisis, but noncommittal noises from the Spanish government in recent months suggest that it could well become permanent. 

READ ALSO: When will Spain’s millionaire tax be scrapped?

Double taxation?

As you now know, the solidarity tax is not the same as Spain’s annual wealth tax and according to tax professionals you should not have to pay the tax twice.

If you live in a region where you need to pay wealth tax, it will be deductible from the solidarity tax, but if you live in one of the two regions where you don’t pay wealth tax – Madrid or Andalusia, where it’s been abolished – you won’t be able to deduct any.

As is, the taxes an individual pays in the existing wealth taxes as calculated under local regional rules are deductible from what they need to pay for the Spain Solidarity Wealth Tax.

We at The Local Spain are not tax professionals. What we know, we have learned the hard way by researching and reading, but if you have any doubts about your particular situation, it’s always best to talk to a lawyer.