Detail on Wealth Tax -

Hi all,

Thinking of moving to Spain and trying to get my head around exactly how the Wealth Tax works. I've read around it, I think I understand the detail in terms of the exemptions, exemptions for housing, what's included and what isn't, how form 720 works, etc.

What I don't understand is this line that I've seen on a few tax advice websites:

"Your cumulative wealth and income taxes cannot exceed 60% of the ‘general and savings taxable income bases’ of residents (but still excluding from savings income any gains on assets held for more than one year, and the associated tax rates). This is subject to paying a minimum of 20% of the full wealth tax calculation."

What exactly does this mean in practice? It sounds like you calculate the wealth tax payment, but that your total wealth and income tax is capped by something called the 'general and savings taxable income bases', but also that the wealth tax is floored at 20% of the calculated charge.

Could someone give me an example of this? What exactly does 'general and savings taxable income bases' mean?

Thanks!

Haha, I was a bit put out by the response to my post from the accountants that seemed to say "Pay us, we'll tell you"

So I was spurred on to find out the answer and reply to myself. As I can't find this written down anywhere else in English I'll put it down here. Here, we go, someone tell me if you think I'm wrong. It's here in Spanish:

https://planificacionfiscalypatrimonial. com/tag/limite-conjunto-irpf-ip/

Cuota*_IRPF + C_IP ≤ 60% x BaseImponible*_IRPF

Basically the fee for Impuesto Patrimonio + income tax can't exceed 60% of the income tax alone, but you always have to pay at least 20% of the Patrimonio charge.

This seems pretty good news for retirees that might be income poor but cash rich.

I'm pretty sure that the graph in the link I provided is the wrong way round - anyone agree?

Anyone have any thoughts on this? Would love to get any corrections or extra detail!

Firstly, which region do you live (or intend to live) in? Regions have different rules on patrimonio tax. For example, the Madrid region has a 100% allowance so there is no wealth tax to pay. Most other regions have €700,000 exemption for each person (€500,000 in Catalonia) so a married couple would have €1.400,000 exemption and, if they are resident, another 300k each so wealth tax wouldn't kick in unless they have over €2,000,000 in assets. Even then, the tax goes from 0.2% for assets 0-167,000 (that's over the 2 million allowance) up to over 10 and half million in assets over and above your 2 million allowance.

If your total wealth is above the allowances, take specialist advice on exactly how it will affect you and what your options are to reduce it as I doubt many on here will have the kind of assets to pay it.

Thanks Bob,

Yup, I'm aware of all of that, thanks.

What I'm specifically after is the interplay between IRPF and IP.

In the Blevins Franks guide:

blevinsfranks. com /news/blevinsfranks/article/spanish-wealth-tax-how-does-it-affect-expatriates

There's this reference:

For a start, your cumulative wealth and income taxes cannot exceed 60% of the ‘general and savings taxable income bases’ of residents (but still excluding from savings income any gains on assets held for more than one year, and the associated tax rates). This is subject to paying a minimum of 20% of the full wealth tax calculation. 

This reads as saying the cumulative IRPF and IP can't exceed 60% of the general/saving tax base. How exactly is that base defined? Has anyone used this?