What is the Wealth Tax?

In 2008, the Zapatero Government eliminated the Wealth Tax, and it seemed that everything was going well until that same year, the real estate crisis began, and In 2011, the tax was established again, in principle, temporarily.

This year, the Wealth Tax has been extended again, but the tax bonus will depend on each Autonomous Community. Based on the comparison prepared by the Registry of Tax Advisors, some Communities, like Madrid, have a bonus of 100%, compared to Aragón and Extremadura, which pays the most.

Next, we are going to explain five keys so that you know the basic aspects of this tax.

Wealth tax: definition

The wealth tax is regulated in Law 19/1991, of June 6, on the Wealth Tax, which establishes that it is a direct tax of a personal nature that taxes the net assets of natural persons.

It is a direct tax because it is applied to the direct manifestation of economic capacity, such as the possession of assets. Another direct tax, for example, is the Personal Income Tax, which taxes what is earned.

Furthermore, it is a personal tax because it takes into account the personal and family circumstances of each taxpayer (age, health, family responsibilities, debts and expenses, among others).

Who is subject to Wealth Tax?

There are two types of taxable persons, which are the following:

• Passable persons due to personal obligation. These are natural persons who have their habitual residence in Spain regardless of the place where the net assets are located.
• Passable subjects by real obligation. Any other natural person for goods and rights of which they are the owner when they are located in Spanish territory.

To determine habitual residence, the criteria of article 9 of the Personal Income Tax Law are taken into account, based on which it is understood that the taxpayer has his habitual residence in Spanish territory. When any of the following assumptions occur:

1.- They remain in Spanish territory for more than 183 days during the calendar year.

2.- That the main nucleus or base of its activities or economic interests is located in Spain, directly or indirectly.

What is the tax?

As established in the definition of the Wealth Tax, the tax base of the tax is made up of the value of the net assets of the taxable person, that is, by the difference between:

• The value of the assets and rights the taxable person owns.
• Actual charges and encumbrances when they reduce the value of the assets above and rights and the personal debts or obligations of the taxpayer.

Regarding the valuation of assets and rights, the Wealth Tax Law establishes a series of rules in Chapter IV. For example, for the valuation of real estate, whether rural or urban, the highest of the following values ​​will be considered: the cadastral value, the one verified by the Administration for other taxes or the acquisition price or value.

When is the tax due?

The Wealth Tax accrues on December 31 of each year. Therefore, the net assets the taxable person holds on the date above will be considered.

What powers do the Autonomous Communities have regarding the Wealth Tax?

The income from the Wealth Tax is transferred to the Autonomous Communities so they can regulate the exempt minimum, the tax rate and the deductions or bonuses. If the Autonomous Communities do not establish regulations for the aspects above, state regulations will apply.