Spanish Wealth Tax (Impuesto sobre el Patrimonio)

Spain's Impuesto sobre el Patrimonio (IP) is an annual tax on net wealth — the value of assets minus liabilities. It operates on two levels that affect different groups of taxpayers:

• Spanish tax residents are subject to IP on their worldwide net wealth — all assets held anywhere in the world are included in the tax base.
• Non-residents are subject to IP only on assets physically located or legally deemed to be in Spain — principally Spanish real estate, bank accounts in Spanish institutions, shares in Spanish companies, yachts berthed in Spain, and other Spain-sited assets.

IP is filed annually with Modelo 714. The national minimum exemption is €700,000 per person (€1.4m for a married couple filing jointly). Additionally, the main residence qualifies for a €300,000 exemption for residents. These thresholds mean that IP primarily affects high-net-worth individuals — but the rates can be significant for those who do cross the threshold.

The Solidarity Wealth Tax (2023–present)

Since 2023, a new national-level Impuesto de Solidaridad de las Grandes Fortunas applies to net wealth above €3 million, at rates of 1.7% to 3.5%. This tax was introduced partly to prevent autonomous communities from eliminating IP through regional bonuses — it acts as a floor, ensuring high-net-worth individuals pay at least the national solidarity rate even where regional IP is zero (as in Madrid).

Spain's IP is a real cost for high-net-worth individuals — but there are legitimate planning strategies that can significantly reduce exposure. The key tools we use include:

Autonomous Community Selection

Residency in Madrid means paying zero IP (though the solidarity tax still applies above €3M). Andalucía, following 2022 reforms, also applies a 100% bonus on IP — though this was reversed in part for the solidarity tax. The choice of autonomous community of residence has a direct impact on IP liability, and we advise clients relocating to Spain on the most tax-efficient region for their specific profile.

Family Business Exemption

Assets held through a qualifying family business — including holdcos with active subsidiaries — can benefit from full IP exemption. The conditions are technical but achievable with proper structuring: active business activity, minimum 5% direct ownership (or 20% family group), managerial role, and salary from the business exceeding 50% of total income. This is one of the most powerful IP planning tools for entrepreneurial clients.

Non-Resident Structuring

For non-residents with Spanish assets, holding real estate through a foreign company can in certain cases alter the IP base — though Spain has anti-avoidance rules that attribute IP liability to the non-resident shareholder where the company's assets are predominantly Spanish real estate. We assess whether this strategy remains effective given the specific asset mix.

IRPF/IP Joint Limit

For Spanish residents, combined IRPF + IP cannot exceed 60% of the IRPF taxable base. Where IP would cause the combined charge to exceed this limit, the IP is reduced accordingly — though the reduction cannot exceed 80% of the IP charge. This cap is relevant for clients with large wealth relative to income.