Wealth Tax in Andalusia: 100% relief and the Solidarity Tax from €3 million

Wealth Tax in Andalusia: parity with Madrid from 2023

The fiscal reform introduced by the Junta de Andalucía, through Decreto-ley 7/2022 and the subsequent Budget Law 2023, established a 100% rebate on the full regional Wealth Tax (Impuesto sobre el Patrimonio) quota for residents in Andalusia. Applied for the first time in the 2022 tax year, the measure aligned Andalusian wealth taxation with that of Madrid, which had maintained the same rebate since 2008.

The political significance of the decision was considerable: Andalusia is Spain’s most populous autonomous community and one of the largest by economic weight, and the effective elimination of the Wealth Tax sent a clear signal about the regional government’s fiscal policy. In practical terms, Andalusia residents with estates between €700,000 and €3 million ceased to pay any Wealth Tax quota from 2022. For estates above €3 million, the state-level ISGF acts as a minimum floor, equalising the tax burden with that of Madrid.

Andalusia thus combines two major fiscal advantages that make it especially attractive for large asset holders: the 100% Wealth Tax rebate (as in Madrid) and the 99% rebate on the Impuesto de Sucesiones y Donaciones (Inheritance and Gift Tax) for Groups I and II (also as in Madrid). This double fiscal benefit, combined with climate and quality of life, explains the growth of Andalusia as a destination for tax residence relocations from other regions, particularly from Catalonia and the Balearic Islands.

Beneficiaries of the Andalusian Wealth Tax rebate: residents and non-residents

The 100% rebate applies primarily to the regional Wealth Tax quota. For tax residents in Andalusia, the effect is clear: no tax payable, with the sole caveat of a formal obligation to file Modelo 714 if the taxable base exceeds €2 million.

For non-residents in Spain with assets in Andalusia, the position is more complex but equally favourable since the 2021 reform. The Ley del IP establishes that non-residents are taxed under the rules of the autonomous community where the majority of their Spanish assets are situated. A foreign investor with a villa on the Costa del Sol valued at €2 million and no other assets in Spain would be taxed under Andalusian rules, that is, with a 100% rebate on the regional quota. The ISGF would not apply if the net Spanish estate is below €3 million.

This alignment particularly benefits large international property owners on the Costa del Sol, one of Europe’s most active luxury property markets, who until 2021 could only access the state Wealth Tax rules without the regional rebate.

The ISGF in Andalusia: the same rule as in Madrid

The Impuesto Solidario de las Grandes Fortunas applies in Andalusia on exactly the same terms as in Madrid. As a state-level tax, regional rules cannot modify it. For an Andalusia resident with a net estate above €3 million, the regional Wealth Tax quota is zero (rebated) and the ISGF is payable in full, with no deduction available for Wealth Tax paid (which is zero).

The ISGF scale is: 1.7% on the taxable base between €3 million and €5 million, 2.1% between €5 million and €10 million, and 3.5% above €10 million. The exempt minimum is €700,000, as in the Wealth Tax. A net estate of €8 million in Andalusia would generate an annual ISGF quota of approximately €140,000.

The principal tool for reducing the ISGF taxable base is the family business exemption under article 4 of the Ley del IP, which also applies for ISGF purposes. For Andalusian family entrepreneurs, numerous in sectors such as agri-food, construction, tourism and real estate, a correctly structured family business exemption can eliminate or drastically reduce the ISGF base.

The Costa del Sol and the Wealth Tax: a specific context

Andalusia is home to Spain’s largest luxury property market. The Costa del Sol, and in particular the Marbella-Benahavis-Estepona triangle, concentrates tens of thousands of high-value properties belonging to national and international residents. Wealth Tax planning in this context has specific characteristics that BMC understands in depth:

Andalusia residents with large property portfolios. Developers, investors and families with multiple properties on the Costa del Sol must value those assets for Wealth Tax purposes at the highest of three figures: the cadastral value, the acquisition price or the value determined by the tax authorities. In the luxury property market, cadastral values are typically well below market value, which can result in a Wealth Tax base lower than the taxpayer expects. The 100% rebate makes this irrelevant for the regional Wealth Tax quota, but it matters for the ISGF.

Non-residents with property on the Costa del Sol. International investors who are not Spanish tax residents are subject to the Wealth Tax (and ISGF) only on their Spanish assets. The Andalusian rebate benefits them where the majority of their Spanish assets are in Andalusia. Many of these non-residents are also clients of our advisory service covering IRNR (Non-Resident Income Tax), the Beckham Law and the Wealth Tax, which we describe in more detail on our tax advisory for Marbella page.

International residents under the Beckham Law (Ley Beckham). Foreign professionals who settle in Marbella or Malaga under the special tax regime of the Ley Beckham are not ordinary tax residents for Wealth Tax purposes: during the period in which the special regime applies, the Wealth Tax only covers their assets and rights situated in Spain (as for non-residents), not their worldwide estate. This can represent a significant saving for those with substantial assets outside Spain.

The dual Andalusian rebate: Wealth Tax and Inheritance Tax

One of the most powerful features of wealth taxation in Andalusia is the combination of the 100% Wealth Tax rebate with the 99% rebate on the Impuesto de Sucesiones y Donaciones for Groups I and II. This dual advantage makes Andalusia one of the most fiscally efficient communities in Spain for the accumulation and intergenerational transfer of wealth.

The 99% Inheritance Tax rebate for Groups I and II (descendants, spouse and ascendants) means that an inheritance of any amount between parents and children or between spouses generates a virtually zero effective tax liability. Only 1% of the calculated tax is payable, regardless of the value of the estate. This rebate, comparable to that of Madrid, makes Andalusia one of the most favourable regions in Spain for the hereditary transfer of family wealth.

For entrepreneurs based in Andalusia who combine the family business exemption in the Wealth Tax (extended also to the ISGF) and the 95% reduction under article 20.6 of the Ley del ISD (applicable to the family business in succession), the cumulative tax burden on business assets over the entrepreneur’s lifetime and at the moment of transfer can be very low. This integrated planning requires the corporate structure to permanently meet the requirements of article 4 of the Ley del IP and the additional conditions of article 20.6 of the Ley del ISD.

Wealth Tax and real-estate investment in Andalusia

Andalusia attracts a significant share of foreign real-estate investment in Spain. The Costa del Sol, the regional capital Seville and other cities including Córdoba, Granada and Malaga’s technology hub attract national and international investors who must plan their tax obligations carefully.

For foreign investors acquiring property in Andalusia, the sequence of tax exposures can include: the Impuesto sobre Transmisiones Patrimoniales (Transfer Tax, ITP, at the 7% rate applicable above €1 million in Andalusia) on acquisition; the IRNR (Non-Resident Income Tax) each year (on deemed rental income if the property is not let, or on actual rental income if it is); the Wealth Tax in Andalusia (with the 100% rebate where the Andalusian rules apply, or the ISGF if the estate exceeds €3 million); and the municipal capital gains tax and IRNR on the gain at the point of sale.

BMC provides comprehensive advisory services for foreign real-estate investors in Andalusia, coordinating all tax obligations from acquisition to exit and planning the optimal holding structure (direct ownership, a Spanish company or a foreign company) in the light of the investor’s profile and objectives.

Current Wealth Tax rules for Andalusia are published by the Agencia Tributaria de Andalucía (ATRICA) and information on the ISGF is available on the AEAT electronic office.