Spanish wealth tax and the tax on large fortunes (modelo 714)

The wealth tax (Impuesto sobre el Patrimonio) taxes the net wealth of an individual on 31 December of each year: the value of all their assets and rights (property, bank accounts, shares, insurance policies, jewellery, vehicles) minus debts and charges. It is governed by Ley 19/1991, de 6 de junio (the Spanish Wealth Tax Act).

Modelo 714 is the official return for that tax, filed online through the electronic office of the Agencia Tributaria (AEAT, also called Hacienda, the Spanish tax authority) within the same annual campaign as the Renta, the Spanish personal income tax return. There is no paper version: filing online is compulsory.

It is a state tax ceded to the comunidades autonomas (Spain's autonomous regions), which can set their own exempt allowance, their own rate scale and their own reliefs. That is why the same fortune can pay a lot, a little or nothing depending on where its owner lives. You can see the price of the Managora service on the service page (modelo 714).

Under article 37 of Ley 19/1991, you must file modelo 714 if you are in one of these two situations: your tax liability, once the exempt allowance, deductions and reliefs have been applied, comes out as payable; or the value of your assets and rights, valued under the rules of the tax, is more than €2,000,000, even if the result is zero.

This second threshold matters: it is measured on the gross value of the assets and rights, without deducting debts, and it requires you to file even when nothing is payable. That is why, in regions that give a broad relief on the tax (such as Andalucia, or Madrid for wealth below the threshold of the tax on large fortunes), many residents pay nothing but do have to file the return.

Residents in Spain are taxed under obligacion personal (unlimited liability), on their worldwide wealth. Non-residents are taxed under obligacion real (limited liability), only on the assets and rights located in, or exercisable in, Spanish territory.

As a general rule, the taxable base (your net wealth) is reduced by an exempt allowance of €700,000. The rate scale applies to the remainder. The subsidiary state scale runs from 0.2% to 3.5%, and applies when the autonomous region has not approved one of its own.

In addition, your main home is exempt up to a value of €300,000 per owner. Anything above that figure is included in the base. The outstanding mortgage on the home is deducted as a debt within your overall wealth.

There is a joint cap: the sum of your IRPF (Spanish personal income tax) liability and your wealth tax liability cannot exceed 60% of the IRPF taxable base. If it is exceeded, the wealth tax liability is reduced, with a floor of 20% of that liability. Family business assets and shareholdings in companies that provide your livelihood are also exempt if they meet the requirements.

The wealth tax is ceded to the comunidades autonomas, and that is where the big difference lies. Several regions give an almost total relief, so that many residents pay nothing. That said, while the tax on large fortunes is in force, that 100% is no longer flat for large estates: Madrid, Murcia and La Rioja have replaced the 100% relief with a variable relief (equal to the difference between the wealth tax liability and the liability under the tax on large fortunes), so that high net wealth does pay the wealth tax to its region. Andalucia keeps the 100%, with the option of paying the liability that the tax on large fortunes would otherwise absorb. Cantabria and Extremadura also apply very high reliefs. Galicia gives a 50% relief. Cataluna, Comunidad Valenciana, Illes Balears, Asturias and Aragon have no general relief and the tax is payable.

The exempt allowance also varies: €700,000 in most regions, but for example €500,000 in Cataluna, and higher figures of their own in the Comunidad Valenciana and Illes Balears. The rate scales vary too, with top rates that in some regions go above the state rate of 3.5%.

What decides where you are taxed is the habitual residence of the owner (the region where you have lived the most days over the recent periods), not where the assets are. Managora determines which region applies to you and applies its rules in force. The exact figures per region are worth confirming each year, because they change by regional law.

The Impuesto Temporal de Solidaridad de las Grandes Fortunas (ITSGF, the temporary solidarity tax on large fortunes), created by Ley 38/2022, is a state tax on net wealth above €3,000,000. It was created as a temporary tax, but Real Decreto-ley 8/2023, de 27 de diciembre, extended its effects indefinitely, so it remains in force. It is declared with modelo 718.

Its scale is 0% up to €3,000,000, 1.7% between €3,000,000 and €5,347,998.03, 2.1% up to €10,695,996.06 and 3.5% above that. It also applies an exempt allowance of €700,000 for residents.

The key point is that it is complementary to the wealth tax: whatever you have already paid in wealth tax is deducted from its liability. While the ITSGF has been in force, several regions have adapted their reliefs precisely to keep that revenue in their own territory. Madrid, Murcia and La Rioja have replaced the 100% relief with a variable relief, equal to the difference between the wealth tax liability and the ITSGF liability: large estates therefore go back to paying the wealth tax to their region and their ITSGF comes out at zero. Andalucia keeps the 100%, but allows you to opt to pay the liability that the ITSGF would otherwise absorb. That is why, today, the only people bearing a state charge through this route are those resident in a region that in practice still does not charge the wealth tax to large estates.

When the person with substantial wealth is a shareholder or director of one or more companies, the transactions between that person and their companies (or between companies in the same group) are related-party transactions and must be documented and, if they exceed certain thresholds, reported to Hacienda with modelo 232.

Modelo 232 does not involve a payment: it is an information return filed by the company (within corporate income tax), not by the individual in their wealth tax return. But it commonly comes up with the same client: someone with a large fortune usually holds part of it through companies.

It is filed in November for companies whose financial year matches the calendar year. Managora checks whether your companies are required to file and files it for you. You can see the price of the service on the service page (modelo 232).