Publications

On November 10, 2022, amendments were submitted to the Non-government Bill for the establishment of temporary taxes on energy and on credit institutions and credit financial establishments (122/000247). Among others, a joint amendment was submitted by the parliamentary groups of the Socialist Party and of Unidas Podemos-En comú Podem-Galicia en Común, whereby it is proposed to regulate the so-called Temporary Solidarity Tax on Large Fortunes (Solidarity Tax).

This new tax, which is introduced with the stated aims of increasing tax collection and harmonizing autonomous community legislation, is configured as a direct, personal tax supplementary to wealth tax that will be levied on net worth exceeding €3,000,000 and that will apply throughout all of Spain (without prejudice to the Basque and Navarre provincial regimes – the modification of which is envisaged in the amendment itself – or to the provisions of the international treaties and conventions that form part of Spanish domestic law) and may not be devolved to the autonomous communities.

Specifically, according to the amendment submitted:

1. The wealth tax rules will apply when it comes to determining who the taxpayer is, which exemptions apply and what the tax base is.

2. In the case of resident taxpayers, the tax base will be reduced, in the form of an allowance, by €700,000.

3. The tax will be levied on net worth, considering exemptions, that exceeds €3,000,000 according to the following scale:

4. Taxpayers will be able to apply an overall limit similar to the limit that already exists for personal income tax and wealth tax payable. Specifically, where the sum of the amounts of gross tax payable in respect of personal income tax, wealth tax and Solidarity Tax exceeds 60% of taxable income for personal income tax purposes, the Solidarity Tax payable will be reduced down to that limit, although the reduction may not exceed 80% of the Solidarity Tax payable prior to such reduction. For calculation of these figures, full reference is made to the wealth tax legislation.

5. Taxes paid abroad will be deductible on the terms of the wealth tax legislation in the case of resident taxpayers and without prejudice to the provisions of the international treaties or conventions. Furthermore, the resulting amount payable will be reduced by the amount of wealth tax effectively paid.

6. The tax will fall due on December 31 of each year and will be claimed by means of a self-assessment, which must be filed when it results in tax payable.
           
However, it is established that taxpayers that pay tax directly to the central government because management of the wealth tax has not been devolved to any autonomous community (i.e. nonresidents) will not be required to file a return “unless this tax results in an amount payable”.
          
The filing period will be regulated by the Ministry of Finance and Public Service.

7. The following must appoint a representative (individual or legal entity resident in Spain) before the end of the filing period for the purposes of their relationship with the Spanish tax authorities:

The text specifies that the tax will apply in the first two fiscal years in respect of which the tax falls due after the law enters into force (although it introduces a clause establishing a review at the end of its term to assess whether to maintain or eliminate it). Therefore, depending on when it completes its passage through parliament, the tax may already apply to assets in 2022. It will be necessary to keep any eye, however, on its passage through parliament in order to ascertain the final text and its entry into force.

Lastly, regarding wealth tax and, therefore, also affecting the new Solidarity Tax, an amendment is introduced to establish that, in cases of nonresident taxpayers, securities representing holdings in the equity of entities, not traded on organized markets, at least 50% of the assets of which consist of real estate located in Spain, will be deemed to be located in Spain. To this end, in order to determine the calculation of the assets, the net carrying amount of all the assets recorded in the accounts must be replaced with their market values on the due date of the tax. In the case of real estate assets, the values that give rise to the tax base according to article 10 of the law (i.e. the higher value between the cadastral value, the value determined or verified by the authorities for the purposes of other taxes, or the price, consideration or acquisition cost) will be applied. In this way, the text gets out in front of the view recently taken by the Directorate-General of Taxes (already upheld by some courts) in its ruling V1947-22, of September 13, in which it concluded that “wealth tax does not tax the ownership of shares or holdings of companies not resident in Spain that are owned by individuals not resident in Spain, who should only be subject to the tax for the ownership of assets and rights that are situated, may be exercised or must be fulfilled in Spain”.