The immediate implementation of the new Temporary Solidarity Tax for Large Fortunes has created a whirlwind of uncertainty for both resident and non-resident taxpayers with assets in Spain. What should they do regarding planning and optimising their assets? Should they pay it at all if it might be declared unconstitutional?
The answer to the latter is a resounding “yes” from the Spanish Association of Tax Advisors (Aedaf). Despite their reservations about the tax’s constitutionality, its impact on public finances and the flawed technical implementation, Aedaf has advised those who must pay the new tax (individuals with a net wealth of more than three million euros) to submit their declaration to the tax authorities. Then, if possible, they should appeal it later.
That’s because, by paying the tax now during the voluntary payment period, taxpayers fulfil their obligations and maintain compliance with the law, avoiding any potential issues that could result in penalties or prosecution in the long run.
If you’re liable to pay the Solidarity Tax for Large Fortunes, the Modelo 718 tax declaration must be filed between 1 and 31 July 2023 for the 2022 tax year.
Concerns over the tax
Tax experts in Spain have highlighted many issues with the Temporary Solidarity Tax for Large Fortunes – all of which could lead to it being scrapped and refunds being issued later.
The tax has only just come into effect in Spain, and many argue that it was hastily pushed through because of the government’s short-term focus on immediate revenue collection.
Some tax specialists argue that this approach may harm public finances in the medium term by prioritising short-term gains over long-term sustainability, jeopardising the stability of public finances.
Secondly, it has been argued that the flawed technical implementation of the temporary tax (a result of the hasty and questionable parliamentary processing of the law) has resulted in significant deviations from the intended harmonisation with the Wealth Tax. This has increased the likelihood of litigation and added pressure on taxpayers and tax advisors who lack clarity over the legislation.
We help you stay on top of your tax obligations
At CostaLuz Lawyers, we wait patiently for any developments regarding the Solidarity Tax for Large Fortunes. We follow all of the developments, so you don’t have to.
For expert guidance and personalised assistance with your tax matters, contact our experienced team now.
Click here for more information about our tax services and how we can help you navigate the complexities of the Temporary Solidarity Tax for Large Fortunes.
Protect your rights and make informed decisions with CostaLuz Lawyers by your side.
Maria Luisa Castro
