Back86% of the 12,000 taxpayers of the Temporary Solidarity Tax on Large Fortunes reside in
Madrid.
Beyond its revenue-generating capacity, wealth taxes have always been useful for mapping
the wealth within a territory. In this context, the new Temporary Solidarity Tax on Large
Fortunes, which has collected 623 million euros, provides us with a map of the country’s
largest fortunes.
This tax applies to fortunes exceeding three million euros, with a minimum exemption of
700,000 euros for residents and the option to deduct 300,000 euros from the value of the
primary residence, effectively raising the threshold for many to 4 million. Only 12,010
taxpayers, 0.1% of the total, have declared this tax, of which 86% live in Madrid; 7.2% in
Andalusia; 2.85% are non-residents or residents of Ceuta and Melilla; 2.68% in Catalonia; and 0.76% in Galicia. Other regions have fewer than 20 large fortunes, with a minimum of 3 in La Rioja or the Canary Islands and 17 in Valencia.
It is important to note that wealth linked to family businesses is exempt from Wealth Tax and
this new tax, so it is not reflected in these figures.
Property Owners, Cash, and Cryptocurrencies
The digital tax declaration forms, which are completed from July 1st to 31st, provide insight
into the taxpayers primarily affected by the tax: those with substantial real estate assets and
financial liquidity.
It is also necessary to provide information about deposits in current or savings accounts,
ownership of government debt, bonds, obligations, certificates of deposit, or promissory
notes.
The tax authorities require specific details about stocks and shares, investment funds, and
assets, as well as non-negotiable securities. Furthermore, the Ministry requests information
regarding life insurance, temporary and life annuities, luxury items like vehicles, jewelry, furs,
boats, and aircraft, art and antiques, and intellectual property. Naturally, the tax authority
also demands information about cryptocurrency balances.
52,000 Euros in Tax Bill
Based on this information, the Ministry of Finance has collected the results of its most recent
tax creation: the Temporary Solidarity Tax on Large Fortunes collected a total of 623.6
million euros from Spain’s top 12,010 fortunes in 2022. Revenues primarily came from
Madrid, Andalusia, and Galicia.
The amount collected by the new tax represents only 40% of the initially estimated 1.5 billion
euros by the Ministry of Finance after subtracting the amounts effectively paid for Wealth
Tax in regions where it applies. In the case of this new tax, which affects 0.1% of taxpayers,
the 12,010 individuals with fortunes over three million euros had an average tax liability of
52,000 euros.
As anticipated since the tax’s inception, the most affected taxpayers are those in
autonomous communities that grant deductions for the payment of the Wealth Tax. This
includes Madrid, which pioneered a 100% deduction, Andalusia, which followed suit last
year, and Galicia, offering a 50% deduction.
In fact, 89% of all revenues from the new tax, totaling 555 million euros, come from the
Community of Madrid, the country’s business hub, which, in part due to its attractive fiscal
policy, has attracted 85% of the new tax’s declarants, totaling 10,302 individuals.
Following in significance are the large fortunes of Andalusia, with 865 declarants (7.2%),
contributing 29.7 million euros (4.76%); and the fortunes of Galicia: 91 individuals (0.76%),
with a total contribution of 9.8 million euros (1.57%). These three communities account for
over 95% of taxpayers and revenues.
The new solidarity tax on large fortunes applies to fortunes exceeding three million euros,
with a deduction of 700,000 euros for residents and a reduction of up to 300,000 euros
based on the value of the primary residence. In practice, this means that the tax is paid by
fortunes exceeding four million euros that have not previously paid Wealth Tax.
The tax rates range from 0% up to three million euros; then they increase to 1.7% for taxable
bases up to 5.34 million euros, 2.1% for amounts between 5.34 and 10.69 million euros, and
finally, 3.5% for bases exceeding that amount.
B Law & Tax International Tax & Legal Advisors.
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