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News and Events on Spanish Laws and Taxes

WEALTH TAX – VALENCIA REGION UPDATED 2024

Taxable event

Be the owner of goods and rights in Spain of economic content before December 31  of each year.

Taxable

Only natural persons. Legal persons (companies, societies, etc.) are not taxed by this tax

The following:

  1. In general, natural persons who have their habitual residence in Spanish territory are taxed by personal obligation, who have to declare the set of assets and rights of economic content of which they are holders on December 31, regardless of the place where the goods are located or the rights can be exercised, deducting the charges and encumbrances of a real nature that reduce the value of the goods and rights.  respectively, as well as the debts and personal obligations for which the declarant has to respond.
  2. Persons who do not have their habitual residence in Spanish territory and are the owners of assets or rights that are located, can be exercised or have to be fulfilled in Spanish territory on December 31, deducting the charges and encumbrances of a real nature that affect these goods or rights, are taxed by real obligation, as well as the debts for capital that have been invested.

Tax base

It is the value  of the taxpayer’s net worth. This magnitude is the algebraic difference between the amount of gross equity and all deductible debts.

The different assets and rights that make up the taxpayer’s assets must be computed by applying the specific valuation rules established for this purpose by the Tax Law according to the nature of each patrimonial element.

How to calculate properties and other asset’s values for Wealth Tax?

In case of real estate/properties, the valuation of these assets for the wealth tax is always the maximum between the cadastral value, the purchase value of the fiscal value (the one  verified by the Administration for the purposes of other taxes).

In the case of bank accounts and deposits, the maximum between the value at December 31 and the average balance of the last quarter is taken.

Debts deductible in wealth tax are charges and charges of a real nature that reduce the value of the goods or the respective rights, as well as debts and personal obligations for which the taxable person has to respond. They are only deductible if duly justified, and interest cannot be deducted in any case.

Take into account the existence of exempt goods with the requirements provided for in the LIP and in Royal Decree 1704/1999, of November 5, which determines the requirements and conditions of business and professional activities and participations in entities for the application of the corresponding exemptions in the Wealth Tax. Thus, they are exempt:

  1. The assets that make up the Spanish historical heritage that are registered in the General Register of Assets of Cultural Interest or the General Inventory of Movable Property, as well as those that have been classified as assets of cultural interest by the Ministry of Culture and are registered in the corresponding registry.
  2. The assets that make up the historical heritage of the autonomous communities.
  3. Certain objects of art and antiques.
  4. The domestic trousseau.
  5. Economic content rights in the following instruments:
    1. The consolidated rights of the participants and the economic rights of the beneficiaries in a pension plan.
    2. The rights of economic content that correspond to premiums paid to the insured pension plans defined in article 51.3 of the Personal Income Tax Law.
  • The rights of economic content that correspond to contributions made by the taxpayer to the business social security plans regulated in article 51.4 of the Personal Income Tax Law.
  1. The rights of economic content derived from the premiums paid by the taxpayer to group insurance contracts, other than corporate social security plans, which implement the pension commitments assumed by companies, in the terms provided for in the first additional provision of the revised text of the Law on the regulation of pension plans and funds, and the corresponding deployment regulations, as well as those derived from the premiums paid by employers to the aforementioned group insurance contracts.
  2. The rights of economic content that correspond to premiums paid to private insurance that covers the dependency defined in article 51.5. of the Personal Income Tax Law.
  3. The rights derived from intellectual or industrial property, as long as they are part of the author’s patrimony and, in the case of industrial property, provided that they are not related to economic activities.
  4. Securities belonging to non-residents the income from which they are exempt by virtue of the provisions of article 14 of the revised text of the Law on income tax for non-residents, approved by Royal Legislative Decree 5/2004, of March 5.
  5. Business and professional assets.
  6. Holdings in certain business and professional entities.
  7. The taxpayer’s habitual residence, with a maximum amount of 300,000 euros

Deductions – Currrent expenses, debts, mortages, and permanent/habitual residence. 

The net patrimony of the natural person constitutes the set of goods and rights of economic content of which he is the owner, deducting the charges and encumbrances that decrease their value, as well as the debts and personal obligations for which the owner has to respond. In addition, it is presumed that the assets and rights that belonged to the taxpayer at the time of the previous accrual form part of the patrimony of the taxpayer, unless there is proof of transfer or patrimonial loss.

The tax accrues on December 31 of each year and affects the assets owned by the taxpayer on this date.

Regulations: Art. 4.Four Wealth Tax Law

The habitual residence of the taxpayer is exempt, with a maximum amount of 300,000 euros.

The exemption will be applied by the taxpayer who holds the right of ownership, full or shared, or a real right of use or enjoyment over the habitual residence (usufruct, use or habitation).

NOTE: Taxpayers who are holders of rights that do not give rise to the use and enjoyment of the habitual residence (such as, for example, bare ownership, which only confers on the owner the power to dispose of the residence, but not its use and enjoyment). , they will not be able to apply the exemption of the habitual residence.

For the purposes of applying the exemption, the residence in which the declarant resides for a continuous period of three years is considered the habitual residence. However, it will be understood that the dwelling had that character when, despite the expiration of said period, the death of the taxpayer occurs or there are circumstances that necessarily require the change of dwelling, such as marital separation, job transfer, obtaining first employment or more advantageous employment or other analogous.

Net tax base

To determine the taxable base of taxpayers resident in the Valencian Community, the tax base must be reduced by the amount of the tax-exempt minimum, which amounts to:

Amount Application
500.000 EUR For taxpayers for personal obligation of the tax who habitually reside in the Valencian Community.
700.000 EUR For tax payers for real estate obligation (those how have not permanence residence in Valencia region), as Spanish non residents.
1.000.000 EUR For taxpayers with mental disabilities, with a degree of disability equal to or greater than 33%, and for taxpayers with physical or sensory disabilities, with a degree of disability equal to or greater than 65%.

Tax rate

The tax liability of taxpayers resident in the Valencian Community is obtained by applying the following tax scale to the  tax base:

Net tax base(up to euros) Quota(euros) Remaining net tax base(up to euros) Applicable rate(percentage)
0,00 0 167.129,45 0,25
167.129,45 417,82 167.123,43 0,37
334.252,88 1.036,18 334.246,87 0,62
668.499,75 3.108,51 668.499,76 1,12
1.336.999,51 10.595,71 1.336.999,50 1,62
2.673.999,01 32.255,10 2.673.999,02 2,12
5.347.998,03 88.943,88 5.347.998,03 2,62
10.695.996,06 229.061,43 From now on 3,5

TLACORP 2024