The most outstanding modification is the disappearance of the previous 100% bonus, therefore the tax will be paid according with a gradual scale from 0.2 % to 2.5 % the highest percentage corresponds to the bigger amount of assets. We should keep in mind that since this tax was transferred by the Spanish Estate to each individual Autonomous Spanish Communities, (Comunidades Autonomas) these Communities are now free to change these percentages.
Another major change is the modification of article number 28 of the Law which considerably increases the tax exempt amount from € 108.182,18 to over € 700.000 since only those persons whose total net assets ( active – passive) are over € 700.000 will pay this Tax. Once again the Autonomous Communities are free to change the minimum exempt amount should they consider it appropriate.
There is also a very important change for Non Resident Tax payers in Spain as in point THREE of the above mentioned article 28, it is stated that this minimum exemption of € 700.000 will also NOW apply to Non Tax Residents.
This is very important since the Law previously stated that the minimum exemption did not apply to those non resident under real obligation to contribute (i.e. non residents tax owners of a Holiday home with no additional commercial activities in Spain among others). Thus the new wording is fairer now for Non Residents in Spain since the minimum exemption now applies to Residents and Non Residents alike with no discrimination whatsoever.
In reference to the persons who are Non Resident in Spain but subject to pay this newly recovered Wealth Tax, it is pointed out that in certain cases they should name a REPRESENTATIVE to act for them in front of the Tax Office. This representative should be named when they operating via a permanent establishment (*office, shops branches etc.) or when required by the Tax Office due to the amount and characteristics of the assets. The appointed person or company must be resident in Spain.
This is very important as failing to do so will be considered a serious tax violation punishable with a fine of € 1000.
As we mentioned at the beginning of this article this is a TEMPORARY modification since it has also been approved that on 01-01-2013 this Tax will no longer be paid. Therefore this tax will only be paid for the years 2011 and 2012 that should be respectively submitted on 2012 and 2013.
Taking into consideration the possible adjustments in the calculation of the tax, the exemptions for a habitual residence etc., we can then roughly say that:
1.) If you are fiscal resident in Spain, you will have to pay this Tax only if the net amount of your assets (active – passive) wherever located is over € 700.000.
2.) On the other hand if you are non fiscal-tax resident in Spain you will have to pay this Tax only if the net amount of your assets (active – passive) in Spain is over € 700.000. In case of operating via a permanent establishment (*office, shops branches etc.) you should name a REPRESENTATIVE to act for you in front of the Tax Office if you or your business is subject to this tax.
Should any reader find himself or herself in this situation or similar please do not hesitate to contact us and the appropriate advice will be provided.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
White & Baos
Tel: 966 426 185
White & Baos 2011 – All rights reserved.