Wealth tax in Spain: rules, scales and advice 2025
Wealth tax in Spain: rules, scales and advice 2025
Introduction
In addition to local taxes and income tax, some foreign property owners in Spain may be subject to wealth tax. This tax, known as "Impuesto sobre el Patrimonio", is levied on people with high net worth. It is important to understand how it works so that you can anticipate its impact on your investment.
1. What is wealth tax in Spain?
Spanish wealth tax is an annual tax levied on taxpayers' net assets. It applies to both Spanish tax residents and non-residents holding assets in the country. It applies to all assets: property, financial investments, luxury vehicles, works of art, etc.
2. Who is affected?
There are two main profiles of taxpayers:
- Tax residents in Spain, on all their worldwide assets.
- Non-residents, only on assets located in Spain.
Each taxpayer benefits from a general allowance of €700,000 (which may vary depending on the autonomous community), plus a specific allowance of €300,000 on the principal residence.
3. Tax rates applicable in 2025
Tax is progressive and varies according to the net value of the assets. The national scale in 2025 is as follows:
- Up to €700,000: exempt (excluding principal residence).
- From €700,000 to €2,000,000: rate from 0.2% to 0.5%.
- From €2,000,000 to €5,000,000: progressive rate up to 1%.
- From €5,000,000 to €10,000,000: progressive rate up to 1.5%.
- Over €10,000,000: up to 3.5%.
Some regions, such as Madrid, apply a virtually total exemption, while others such as Catalonia and the Valencian Community apply higher rates.
4. How is it calculated?
The calculation is based on the net value of assets:
1. The value of real estate is added together (according to the highest cadastral, tax or purchase value).
2. Financial investments are added (shares, bonds, bank accounts).
3. Include luxury goods (boats, jewellery, works of art).
4. Debts (mortgages, outstanding loans) are deducted.
The result is the tax base after allowances.
5. Example of calculation
A non-resident owns the following property in Spain:
- A villa worth €1,200,000.
- A bank account worth €50,000.
- A remaining mortgage of €200,000.
Gross assets: €1,250,000
Net assets after deductions: €1,050,000
After an allowance of €700,000, the tax base is €350,000.
The rate applied is 0.2% to 0.5%, i.e. around €1,200 in wealth tax.
6. Declaration and payment
Tax is declared to the Agencia Tributaria using **Modelo 714**. The tax return must be filed by 30 June each year. Payment can be made online, by bank transfer or by direct debit. Non-residents generally need to use a tax representative in Spain to complete this process.
7. Optimising tax
There are several ways to reduce the impact of wealth tax:
- Choose your tax residence according to the Autonomous Community (Madrid being the most advantageous).
- Use appropriate legal structures to hold assets.
- Properly deduct all debts linked to taxable assets.
- Diversify your assets between Spain and other countries.
A specialist tax adviser will be able to help you identify the best strategies.
Conclusion
Wealth tax in Spain is a reality for high net worth individuals. Its complexity stems from the fact that it varies from region to region and is added to other property taxes. Anticipating its impact and optimising your tax position will help you to secure and make the most of your property investment in Spain.
