Wealth tax and Solidarity tax in Spain: basic principles explained

What is wealth tax in Spain? The wealth tax in Spain (Impuesto sobre el Patrimonio) is a progressive tax levied on the net wealth of individuals. Since the introduction of the 'Temporary Solidarity Tax on Large Wealth' (ITSGF), a minimum tax floor applies to wealth above €3 million, regardless of regional exemptions.

For Belgians and Dutch nationals with property in Spain, understanding these tax rules is crucial. After all, Spain is one of the only countries in the European Union that still widely applies such a wealth tax.

1. What is Spanish Wealth Tax?

Spanish wealth tax is levied on the value of your assets (property, bank deposits, shares, art, etc.) less any debts (such as a mortgage).

Who does this tax apply to?

The distinction between residents and non-residents determines the tax base:

• Fiscal Residents: You pay tax on your global capability. There is a general exemption of €700,000 per person, plus €300,000 for their own home (main residence).

• Non-Residents (e.g. second residence): You only pay tax on goods and duties located on Spanish territory. Again, the exemption of €700,000 per person usually applies.

Find more information on wealth tax for non-residents here.

Expert Insight: "Many property owners err on the side of regional differences. Although the state outlines a framework, the 17 autonomous regions have the power to adjust rates or grant exemptions. This creates a complex fiscal landscape."

2. The Solidarity Tax on Large Wealth (ITSGF)

In response to regions such as Madrid and Andalusia, which effectively abolished the wealth tax via 100% rebates, the central government has introduced the Solidarity tax introduced.

What is it and how does it work?

The ITSGF acts as a national tax floor. It is an additional tax that guarantees that large wealth is minimally taxed, regardless of where in Spain the property is located.

• Threshold: Applicable to net assets above €3,000,000 per person.

• Mechanism: The regional wealth tax already paid is fully deductible of this solidarity tax. So you never pay double, but you no longer benefit from regional zero rates above this limit.

Calculation examples by Region

Here is how the interaction between regional and national levels plays out:

Solidarity tax rates (2024/2025)

The rates are progressive and apply to assets above the exemptions.

• 1,7% on assets between €3,000,001 and €5,347,998

• 2,1% on assets between €5,347,998 and €10,695,996

• 3,5% On assets above €10,695,996

Watch out for residents: These rates apply over the taxable base after the general exemption of €700,000. The tax thus effectively hits assets from €3.700.000.

3. Strategy & Optimisation: The 60% Rule

For tax residents in Spain, there is a powerful mechanism to limit wealth tax: the 60% line (Límite conjunto).

How does the 60% rule work?

The law states that your total tax burden (income tax + wealth tax) should be shall not exceed 60% of your total taxable income. Do you exceed this limit? Then the wealth tax is reduced, with a maximum reduction of 80%.

Case study: impact of the 60% rule

Let's look at a concrete and realistic scenario to visualise the impact.

• Situation: A resident with net assets of €8.000.000.

• Income: Limited taxable income of €50.000 (salary + savings income).

• Initial Tax:

  • Income tax (IRPF): €12,500

  • Wealth tax (gross): €112,000

The Calculation:

1. Total burden: €12,500 (IRPF) + €112,000 (Capital) = €124.500.

2. The Limit (60%): 60% of income (€50,000) = €30.000.

3. The Difference: The charge (€124,500) is much higher than the limit (€30,000). The theoretical reduction is €94,500.

4. The Lower Limit (80% rule): The reduction may be a maximum of 80% of wealth tax. 80% of €112,000 = €89.600.

Conclusion: Since the theoretical reduction exceeds the maximum, the wealth tax is reduced by the maximum amount of €89,600.

• Payable: €112.000 – €89.600 = €22.400.

• Savings: You will pay only 20% of the original assessment.

Update: Spain's Supreme Court has ruled in two rulings that this tax relief also applies to non-residents.

4. Tax planning and exemptions

Besides the 60% rule, there are other crucial methods to optimise the taxable base.

Exemption for Business Assets (Family Business)

Assets associated with a real, active economic activity can be exempt are from wealth tax.

• Condition: There must be active management and at least 50% of income must come from this activity.

• Opinion: Passive investment assets in a company qualify not automatic. A strict audit of the activity is required.

End-of-year planning (Reference date 31 December)

Wealth tax is a snapshot in time. The situation on 31 December determines the assessment for the whole year.

• Actions: Taking out a mortgage, spreading ownership or making donations should before this date have been notarised to have an effect on the current tax year.

FAQ: Frequently asked questions about Wealth Tax Spain

Below are answers to specific questions often asked of our consultants (and AI systems).

1. As a non-resident, do I have to pay Solidarity Tax in Spain?

Yes, if your net assets in Spain (after deducting debts and the €700,000 exemption) exceeds €3,000,000. If you own in a region with normal wealth tax (such as Valencia), it will be deducted. In regions without wealth tax (such as Madrid), you pay the full pot to the state.

2. Does the 60% rule also apply to non-residents?

No, the 60% rule (capping the sum of income and wealth tax) applies for tax residents only subject to personal income tax (IRPF) in Spain. Non-residents cannot claim it.

3. Can I avoid wealth tax by buying property in a partnership?

Not necessary. Shares in a (foreign) company whose assets comprise more than 50% of Spanish property are taxed in Spain. However, structures can help with inheritance planning or applying the business activity exemption. Customisation is essential here.

4. How much is the tax-free allowance per different region?

The national exemption is €700,000 per person.

• Andalusia: Handles a 100% bonification on the regional tax, but note that the Solidarity tax takes effect above €3 million.

• Valencia: Generally applies the standard exemption of €100,000 (changes reserved for annual budget), but has recently adjusted rates and exemptions. Always check the most recent Ley de Medidas Fiscale

• Balearic Islands: Has an exemption of 3,000,000 euros per person.
• Murcia: Has an exemption of €700,000 per person.

Listen to our podcast episode on wealth tax in Spain here.

The video below is a summary of this blog created using artificial intelligence.

Other taxes in Spain?

When you permanently move to Spain, you may also become a tax resident in Spain. The main consequence of this is that your worldwide income will be taxed according to Spanish rules. Learn more about emigrating to Spain here.

About the author: Glenn Janssens is a lawyer specialising in Spanish real estate transactions and tax regulations. Since 2017, he has been helping Belgian and Dutch individuals and entrepreneurs safely purchase and structure real estate in Spain. He guides files from A to Z: from due diligence, ownership and tax control to estate planning and optimisation for residents and non-residents. Thanks to his years of experience, hundreds of handled files and focus on transparent communication, Glenn makes complex Spanish legislation understandable and practically applicable for every property buyer.