On 1st January 2023, the modification of article 5 of Law 19/1991, of 6th June, on Wealth Tax, came into force, which has modified terms of taxpayers, clarifying that those persons who are non-residents in Spanish territory, but who are owners of real estate in Spanish territory through companies, whether Spanish or foreign companies, will have to pay Wealth Tax on the value of the real estate located in Spanish territory.
Who is affected by this amendment?
Any non-resident individual in Spanish territory who owns and can exercise or fulfil assets and rights located in Spanish territory, or who owns real estate located in Spanish territory indirectly through a company, whether Spanish or foreign.
What assets and rights are considered to be within Spanish territory?
Non-residents will have to pay Wealth Tax when they are holders of participations or shares or securities representing participation in the equity of any type of entity, not traded on an organised market, whose assets consist of at least 50%, directly or indirectly, of real estate located within Spanish territory.
To calculate the assets, all the clean book values of the assets entered in the accounts will be replaced by their respective market values, which will have been determined at the date of accrual of the tax. The market value is considered to be the higher of the cadastral value, the acquisition value or the value ascertained by the authorities.
In this case, the tax will be levied exclusively on these assets or rights of the taxpayer located in Spanish territory.
For example, a tax resident in France has a French SCI that owns a property in Spanish territory. The non-resident will have to pay Wealth Tax in Spain for the market value of the property.
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