Solidarity Tax on large fortunes: Key points for 2024. Last year saw the first application of the Solidarity Tax on Large Fortunes (ITSGF), which sparked considerable controversy and claims of unconstitutionality. The Constitutional Court, however, swiftly upheld its legality. Consequently, taxpayers must once again self-assess and, if applicable, pay this tax.
What does the ITSGF Tax?
The net worth of individuals exceeding €3,000,000.
Who is Affected?
Both residents and non-residents liable for the Wealth Tax must file an ITSGF return if their taxable amount exceeds the deductions or allowances.
Key Points to Remember:
- Residents: Taxed on worldwide assets and rights.
- Non-residents: Taxed only on assets and rights located in Spain.
- Beckham Law Beneficiaries: Taxed only on Spanish assets and rights.
Filing Deadline
For the 2023 tax year, the filing period is from 1 to 31 July 2024. For bank direct debit, the deadline is 26 July, with the debit made on 31 July.
Filing Requirements
Individuals, both resident and non-resident, with net worth over €3,000,000 and a payable tax amount after deductions must file a return. No filing is needed if the tax due is zero, regardless of net worth.
Net Worth Definition
Net worth is the total economic value of a person’s assets and rights, minus debts and liabilities.
Taxable Base Calculation
The taxable base is determined by subtracting the value of debts and obligations from the value of assets and rights, following Wealth Tax rules.
Exempt Amount
The exempt amount is €700,000, applicable to both residents and non-residents. This means taxation starts at net worth over €3,700,000. Initially, non-residents were not eligible for this exemption, but this was amended for the 2022 tax year.
Applicable Rates
The tax has three brackets, ranging from 0% to 3.5%:
| Taxable Base | Rate (%) |
|---|---|
| Up to €3,000,000 | 0% |
| €3,000,000 – €5,347,998.03 | 1.7% |
| €5,347,998.03 – €10,695,996.06 | 2.1% |
| Over €10,695,996.06 | 3.5% |
Tax Payable Calculation
The tax payable is the result of reducing the gross tax by foreign taxes paid and any allowances in Ceuta and Melilla. The amount paid under the Wealth Tax can be deducted to avoid double taxation. This tax primarily impacts regions with reduced Wealth Tax rates.
Limitations on Tax Payable
The combined ITSGF, IRPF, and Wealth Tax cannot exceed 60% of the IRPF taxable base for personal obligation taxpayers. If exceeded, the ITSGF is reduced accordingly, but not by more than 80%.
Filing Method
Del Canto Chambers’ team is available to discuss any questions you may have
Del Canto Chambers is a leading London Barristers Chambers specialising in Law, Tax & Legal Advice. Our dual-qualified, multilingual lawyers specialise in international law and tax and have worked on over 500 cases globally
