Wealth Tax: assets of third-party foundations are not reportable

The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the inclusion of foundation assets in the taxable base of Wealth Tax (IP) and the Temporary Solidarity Tax on Large Fortunes (ITSGF). The issue focuses on determining whether a taxpayer must declare assets belonging to a foundation of which they are a part, but over which they do not hold legal ownership.

What the DGT has ruled

The DGT establishes that the assets and rights of a foundation, as it possesses its own legal personality, belong exclusively to the entity. Therefore, the applicant must not include the foundation's assets in their IP and ITSGF tax returns if they are not the holder of rights with economic content over them. The ruling emphasizes that even if the person is a beneficiary or a member of the governing body, if they do not possess certain economic rights or powers of disposal, their rights constitute a mere expectation without economic value, falling outside the scope of this tax.

What this means for you

This pronouncement has a direct impact on natural persons resident in Spain who maintain links with entities or foundations, whether national or foreign. If you are part of the governing structure of a foundation or are a beneficiary of its purposes, but do not have a real right or a direct economic interest in its assets, those assets should not be counted in your personal net wealth. The key lies in the distinction between participating in the management or the benefit of the entity's purposes and the actual economic ownership of the assets.

What you should do

It is necessary to analyze the nature of the rights held over the foundation. If a link exists, it must be verified whether said relationship grants powers of disposal or certain economic rights that can be valued. In the event that the relationship is limited to a mere expectation or to governing functions without patrimonial rights, the foundation's assets should not be included in the Wealth Tax return. Given the complexity of these structures, it is recommended to assess each legal situation individually.