Wealth Tax in Catalonia – Frequently Asked Questions

A common question from people living in Catalonia is about Wealth Tax; What assets are Wealth Tax based on, how it is calculated, how can we manage the amount we have to pay, when is it due and what forms are needed for Wealth Tax. This article gives insight into the answers to these questions.

What assets are Wealth Tax based on?

Wealth Tax in Catalonia is assessed annually on our Worldwide assets but less liabilities Eg mortgages.

• Some assets are excluded including Family Business shareholdings (conditions apply), business or professional assets linked to your main source of income, intellectual or industrial property rights and some property rights. Jewellery, art and luxury items are not automatically exempt.
• Art and Antiques can both be excluded IF they are registered with an historical heritage organisation.

How is wealth tax calculated in Catalonia?

Each individual is given an allowance of €500,000 before tax is assessed. In addition, there is an allowance for owners of their main residence of upto €300,000.  If your share of the house is €250,000 you can only claim €250,000 as the allowance. If your share of the house is €450,000, you will be given an allowance of €300,000 and the balance will be added to the rest of your wealth to be taxed.

Over and above these allowances, tax is calculated in a series of levels.  These levels start from the first euro above the allowances given in the answer above.  For example, if your wealth is €667,129.45 and you do not have a main residence, from the table below the tax will be €350.97. (667,129.45 -€500,000 = 167,129.45)

Wealth Tax Rates in Catalonia

How can we manage the amount we pay?

The amount we pay is based on the assets listed above.  However, to avoid our total tax liability leaving us with little or no income, a “tax shield” (Escudo fiscal sobre el patrimonio) has been put in place.  This shield is based upon a set formula

• Our total Wealth Tax and Income Tax for the year, added together, cannot exceed 60% of our income
• When applying this 60% limit a minimum Wealth Tax must still be paid of 20% of the Wealth Tax due (Hence the informal name of the 60/20% rule)

A way, therefore, to manage our Wealth tax liability is to plan our income and our asset purchases.

• When purchasing assets that will be assessed for Wealth Tax, consider buying them in joint names. Each individual will have the €500,000 allowance and also the Wealth tax value will be half of the total value per person. This can lead to a significant reduction in the 20% minimum tax due figure.
• Some savings and investments make income payments. Others do not pay out income, instead allowing it to accumulate in the investment. Advice should be taken but including in your portfolio some savings that do not pay an income reduces the 60% of the income amount.
• Structuring family business ownership carefully
• Identifying and documenting the assets and rights of individuals related directly to their business or professional activities.

When is Wealth Tax due and what forms are needed?

The assessment for Wealth Tax is a section within our La Renta annual tax return.  The proper name of the form is Modello 100.  This is the form you are likely already completing for your income tax and savings tax.  Be sure to provide your tax lawyer with the values of assets that may be assessed for Wealth Tax so they can be included on La Renta.  This form must be submitted by the 30th June at the latest, whilst La Renta’s can be submitted as early as April.

An important point to note is that all the taxes arising from the La Renta have to be paid by the 30th June. This means any income tax, capital gains tax and Wealth tax have to be paid together.