What is the Wealth Tax in Spain for Expats?

Spain’s attractive lifestyle and warm climate have made it a popular destination for expats from around the globe, including those from the UK. However, adjusting to a new tax system is a key aspect of relocating. As an expat, it’s crucial to understand the Spanish Wealth Tax or ‘Impuesto sobre el Patrimonio’.

The Spanish Wealth Tax is a progressive tax, meaning that the tax rate increases as the value of your assets rises. This tax is levied on the net value of your assets as of December 31 each year. Most Spanish residents are subject to this tax if their assets exceed a threshold of around €700,000, excluding their main residence up to a value of €300,000. However, tax rates and thresholds can vary significantly among Spain’s autonomous regions.

As an expat, your liability for Wealth Tax depends on your residency status. If you’re a tax resident (generally defined as spending more than 183 days a year in Spain), you’re subject to Wealth Tax on your worldwide assets. This could include property, savings, investments, and your UK pension.

Non-residents, on the other hand, are only liable for Wealth Tax on assets located in Spain. They also typically don’t qualify for the €700,000 allowance, only the €300,000 allowance on a property owned in Spain.

It’s also important to know that Spain has double taxation agreements (DTAs) with many countries, including the UK. These agreements can prevent you from being taxed twice on the same income.

Given the complexity of tax laws and the frequent changes they undergo, staying up-to-date and compliant can be a challenge. Therefore, it’s strongly advisable to seek professional guidance.

At Chorus Financial, we specialise in providing financial advice to British expats in Spain. Our team has a deep understanding of both UK and Spanish tax systems, and we can help you navigate these complexities to manage your wealth effectively. If you need assistance understanding your tax obligations in Spain or optimising your tax position, don’t hesitate to reach out to us.