Significant Tax Update: Spain’s New Decree Affects Non-Residents with Assets in Spain

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As an international law firm specializing in Spanish taxation, we are eager to share some crucial updates from the Spanish government that could impact you if you’re a non-resident with assets in Spain.

Good News for Non-Residents:

The Spanish Government passed on December 27th, 2023 a new Royal Decree-Law, bringing a significant change to the Temporary Solidarity Tax on Large Fortunes (ITSGF). Previously, non-residents were unable to benefit from the €700,000 tax-exempt minimum available to other taxpayers. This latest decree, however, has amended this, extending the exemption to all taxpayers, regardless of their residency status in Spain.

Key Changes:

  1. Equality in Taxation: The new decree eliminates the prior fiscal discrimination against non-residents, aligning the taxation of residents and non-residents.
  2. Increased Exemption Threshold: The tax now affects estates exceeding €3.7 million, raising the threshold by €700,000.
  3. Impact on Non-Residents: Non-residents in Spain, previously taxed on assets over €3 million, will now benefit from the raised exemption limit.

Implications for Double Taxation Agreements: It’s important to note that this tax is considered analogous to the Wealth Tax (IP), and thus, falls under the regulations of Double Taxation Agreements signed by Spain. This ensures fair treatment under these agreements, even for the new tax.

For Residents in Foral Territories: The extension of the tax also applies in the foral territories, as confirmed by experts from PKF Attest.

Tax Revenue and Compliance: The Ministry of Finance reported that the ITSGF generated €623 million in 2023, with an average tax bill of €52,000 from around 12,010 wealthy taxpayers, representing a mere 0.1% of taxpayers in Spain. This tax is annual, with declarations due between July 1st and 31st for the years 2023 and 2024.

Avoiding Double Taxation: To prevent double taxation, taxpayers of the Solidarity Tax can deduct any Wealth Tax paid to their Autonomous Community.

At Costaluz Lawyers we understand that navigating these tax changes can be complex. We’re here to provide expert advice and assistance tailored to your unique circumstances, ensuring compliance and optimizing your tax position.

Interested in learning more about how these changes might affect you? Contact us for a personalized consultation, and let’s navigate these updates together.

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