Capital Gains Tax (Wealth Tax)

This is a direct, recurrent and personal tax that levies taxes on property or possessions of assets (on its net value) owned by an individual.

It is aimed at the possessions of natural persons, including assets and rights. This is one of the main differences it has with the Income Tax (thus, being complementary to the IRPF, Income Tax Return for Individuals for its acronym in Spanish). This tax was created to be provisional; however, it has been maintained in the tax system.

It was once suspended from 2008 to 2010 by the Law 4/2008 of December 23, which “eliminated the actual obligation to contribute to the IP,” (Capital Gains Tax -Wealth Tax- for its initials in Spanish).

Therefore, we could begin quoting the Law 19/1991 of June 6, where the two main types of persons who must comply with this tax are specified.

Resident taxpayers: Which applies to all natural persons with residence in Spanish territory.

Non-Resident taxpayers: Which corresponds to individuals with residence in another country, but with assets and rights in Spain.

Consequently, we may think that everybody is subject to pay taxes, but in practice “if your assets do not reach a specific value, you only have to report for information purposes.”

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In theory, someone whose assets are above 700,000 Euro must pay this tax; something that does not happen in practice.

To pay taxes, the net equity owned by a person as of December 31 of each year is considered (taxable person) and the amount of taxes to pay may increase progressively from one period to another, based on the increase of assets (as the tax rate increases). Therefore, this tax provides a picture of the property status of the individual as of that date every year.

There could be a presumption on the continuity of ownership when there is no evidence of “transfer or loss of the asset.” Also, with “the presence of an asset subscribed to a person, in tax records or other public records.”

Some seem to be against the payment of this tax, stating among their remarks that “this is a form of double taxation, where both the income obtained and its possession itself are taxed.”

This tax is established and regulated by the State and its “total return is passed on to autonomous communities,” where each of them establishes a tax amount.

If the Autonomous Community does not establish a regulation for the minimum amount exempted, deductions, bonuses and rate of taxation, the state normative shall apply.

That way, the requisites must be up-to-date at the Comarca de la Axarquía, in municipalities like Algarrobo, Benajarafe, Caleta de Vélez and Torre del Mar among others. You can contact us for accounting or solicitor services related with the pay of your taxes.

These are the numbers in Andalusia:

Tax Rate

As of January 1, 2012, the complete tax quota ruled by Article 30 of Law 19/1991 of June 6 (Ley 19/1991, de 6 de junio), of the Capital Gains Tax (Wealth Tax) is obtained applying to the tax base the types specified in Law 3/2012 of September 21 (Ley 3/2012, de 21 de septiembre), which is located in Article 16 bis of Law Decree 1/2009 of September 1, where is approved the Consolidated Text of the provisions adopted by the Autonomous Community of Andalusia in terms of assigned taxes:

Autonomous Community of Andalusia in terms of assigned taxes

The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.

Author: Rosana Tejada
Biographical Info: Rosana Tejada Crespo is a tax advisor holding a Master’s Degree in International Taxation. She specialises in companies and freelancers, tax regulations concerning foreign employees (Beckham Law), non-resident tax, inheritance tax and Spanish income tax. She is one of the founders of Tejada Solicitors, which comprises a group of English speaking solicitors, economists and architects.

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