Wealth Tax & Other Taxes – Spain

Tax on worldwide net assets (assets minus liabilities) exceeding €700,000 for residents. Rates: 0.2% on €700,000-€1M, 0.3% to €2M, 0.5% to €3M, rising to 3.75% above €10.7M. Primary residence exempt up to €300,000. Applies to main residence only.

Madrid autonomous community offers 100% wealth tax relief - effectively eliminates wealth tax for Madrid residents regardless of asset level. Major incentive attracting wealthy individuals and expats. Why many high-net-worth individuals choose Madrid over Barcelona.

Each autonomous community sets own wealth tax rates and exemptions. Madrid: 100% relief. Catalonia, Valencia: full taxation. Andalusia: 100% relief. Some regions increase rates. Critical to consider when choosing Spanish residence.

For tax residents: worldwide real estate, bank accounts, investments, business assets, crypto, cars, jewelry, art. Not included: pension plans, business assets if <5% ownership or <€300,000. Under Beckham Law: only Spanish assets taxable.

Temporary solidarity tax (renewed annually since 2023) on net wealth exceeding €3 million. Rates 1.7-3.5% on progressive scale. Applies nationwide - cannot be eliminated by regional exemptions. Wealth tax paid counts as credit against solidarity tax.

Only affects wealthiest individuals with assets >€3M after exemptions. Combined with regular wealth tax, total wealth taxation can reach 5-7% in high-tax regions. Madrid residents with >€3M still pay solidarity tax despite wealth tax exemption.

Standard VAT (IVA - Impuesto sobre el Valor Añadido) rate 21% applies to most goods and services. Businesses charge IVA on sales, deduct IVA on purchases, remit difference quarterly. Same system as EU VAT.

Reduced 10% rate: food, water, medicines, books, hotels, restaurants, transport, construction/renovation, cultural/sports events. Super-reduced 4% rate: basic foods (bread, milk, eggs), books/newspapers, medicines, wheelchairs, prosthetics.

Must register for IVA when turnover exceeds threshold: €85,000 for goods, certain services. Intra-EU services: no threshold. Digital nomads providing services to foreign clients often not required to register for Spanish IVA if services performed outside Spain or reverse charge applies.