Spanish Wealth Tax & Solidarity Tax

What is the Impuesto sobre el Patrimonio

The Impuesto sobre el Patrimonio (IP) is an annual tax on the net wealth of individuals resident in Spain, assessed as at 31 December each year. Net wealth is calculated as total assets (real estate, bank accounts, investments, vehicles, art, company shares) minus total liabilities. There is a general tax-free allowance of EUR 700,000 and an additional EUR 300,000 exemption for the primary residence.

The Solidarity Tax (ITSGF)

The Impuesto Temporal de Solidaridad de las Grandes Fortunas (ITSGF) was introduced by Law 38/2022 in response to Madrid and Andalusia’s full bonification of the regional wealth tax. It applies to net wealth above EUR 3 million at rates of 1.7% to 3.5%, with the regional IP liability deducted from the ITSGF amount. The Constitutional Court upheld its validity in 2023.

Regional differences

• Madrid and Andalusia: 100% bonification of IP (but ITSGF acts as a national floor)
• Catalonia: rates from 0.21% to 2.75%
• Basque Country and Navarra: separate foral regimes with their own rules
• Other communities: varying rates and reliefs, frequently amended

Key exemptions

• Family business shares: qualifying participations where the holder exercises management functions
• Cultural heritage assets registered with authorities
• Pension plan rights
• Household goods up to 3% of net wealth
• Primary residence up to EUR 300,000

Planning considerations

Strategies include family holding company structures qualifying for the business exemption, residence planning considering regional differences, coordination with income tax and inheritance tax for overall wealth optimisation, and careful analysis of the Beckham Law interaction for inpatriates.