The Spanish Government has extended once again, for the year 2017, the requirement to pay the Spanish Wealth Tax applicable to both residents and non-residents in Spain

8 February 2017

Royal Decree-law 3/2016, of 2 December, through which several tax measures are adopted, extends one additional year the application of the Spanish Wealth Tax.

Created as a special tax, and therefore as a temporary measure, the Wealth Tax’s regulatory regime has undergone changes in the last ten years.   
After elimination of the tax in year 2008 and its temporary re-imposition for the years 2011 and 2012, the measure was extended for the years 2013, 2014, 2015 and 2016, due to the economic crisis and public sector deficit.
Until now, the Executive was expecting to apply a 100% allowance over the tax quota to be paid, which in practice should have meant the exemption of payment of the Wealth Tax for the year 2017. However, the Government has decided now that in order to continue to contribute to maintaining the consolidation of public finance, the application of the said exemption to both resident and non-resident taxpayers in Spain will have to wait for one additional year.
Royal Decree-law 3/2016 contemplates this measure in its article 4, concretely contemplates a new amendment to Royal Decree-law 13/2011, which in practice implies the requirement to pay the tax for the year 2017 and the application of the 100% tax exemption with effect from 1 January 2018.     
Nevertheless, as this is a tax that has been ceded to the Autonomous Communities, said Communities are responsible for collection of the Wealth Tax, and therefore, have the power to establish tax allowances. Such is the case, for example, in the Community of Madrid, which allows a 100% tax allowance, and therefore, Madrid taxpayers do not pay any Wealth Tax at all.  
Payment of this tax also affects natural persons (individuals) who are not residents of Spain. Hence, by way of example, since the entry into force of the new Double Taxation Treaty between Spain and Germany, the Directorate General for Taxation has ruled that a non-resident is a person liable to pay Wealth Tax by virtue of a real obligation where there is indirect participation in the ownership of real estate located in Spanish territory.
This interpretation is reflected in the binding ruling V1452/2014 of the Directorate General for Taxation, which establishes that ownership by a German resident of shares in companies having at least 50% of their assets constituted, directly or indirectly, by real estate located in Spain, creates an obligation to pay this tax.  

For further information, please contact José Blasi.