Spain’s Wealth Tax (Impuesto sobre el Patrimonio)

Spain levies an annual wealth tax on the net assets of tax residents. Unlike income tax, which taxes what you earn, the wealth tax applies to what you own — including real estate, bank deposits, securities, vehicles, jewelry, and other valuable property minus debts and liabilities.

General Exemptions and Thresholds

The nationwide baseline provides two key exemptions:

• General exemption: EUR 700,000 per person. Net assets below this threshold are not taxed.
• Primary residence exemption: Up to EUR 300,000 of your habitual dwelling’s value is exempt.

This means a single person living in their own home effectively has a EUR 1,000,000 exemption before any wealth tax applies. For a married couple filing individually, the combined exemption reaches EUR 2,000,000.

Regional Variations Matter

Wealth tax is administered by Spain’s autonomous communities, and the differences are dramatic:

Region	Effective Policy
Madrid	100% rebate — effectively no wealth tax
Andalusia	100% rebate since 2023 — no wealth tax
Catalonia	Full enforcement, rates 0.21% to 2.75%
Valencia	Full enforcement, rates 0.25% to 3.5%
Basque Country	Own system, rates 0.2% to 2.5%
Balearic Islands	Full enforcement, rates 0.28% to 3.45%

Solidarity Tax on Large Fortunes (Impuesto Temporal de Solidaridad de las Grandes Fortunas)

Introduced in late 2022 to prevent wealthy individuals from simply moving to Madrid or Andalusia to avoid wealth tax, the Solidarity Tax applies to net wealth exceeding EUR 3 million. It is a state-level tax that cannot be offset by regional exemptions.

Rates:

• EUR 3M - 5M: 1.7%
• EUR 5M - 10M: 2.1%
• Above EUR 10M: 3.5%

Any wealth tax actually paid at the regional level is credited against the Solidarity Tax, so this primarily affects residents of regions that exempt wealth tax (Madrid, Andalusia). The tax was initially temporary but has been extended and may become permanent.

Modelo 720: Foreign Asset Declaration

The Modelo 720 is an informational declaration — it does not create a tax liability by itself but requires Spanish tax residents to report foreign-held assets. It is one of the most important (and most misunderstood) obligations for expats.

Who Must File

All Spanish tax residents who hold assets abroad exceeding EUR 50,000 in any of the three reporting categories. Beckham Law beneficiaries and non-residents are exempt.

The Three Categories

Each category is evaluated independently. You only need to report a category if its total value exceeds EUR 50,000:

Category 1 — Bank Accounts All accounts at foreign financial institutions where you are the holder, authorized signatory, or beneficiary. Report the balance as of December 31 and the average balance for Q4.

Category 2 — Securities, Funds & Insurance Shares, bonds, investment funds, life insurance policies, and annuities held with foreign entities. Report the value as of December 31.

Category 3 — Real Estate Property and real property rights (usufruct, bare ownership) located outside Spain. Report the acquisition value and date of purchase.

Filing Deadline and Subsequent Years

• Initial filing: March 31 of the year following the first year you become tax resident and hold qualifying assets.
• Subsequent years: You only need to re-file if any category has increased by more than EUR 20,000 from the last reported value, or if you have sold or closed a previously reported asset.

Penalties: The Current Landscape

The Modelo 720 penalty regime has been through significant legal turbulence:

• Original penalties (2012-2022): Spain imposed severe fines of EUR 5,000 per data item (minimum EUR 10,000) for late or incorrect filings, plus classifying undeclared assets as unjustified capital gains taxed at the marginal rate with no statute of limitations. These were widely considered the harshest asset-reporting penalties in Europe.

• EU Court ruling (January 2022): The Court of Justice of the European Union ruled these penalties were disproportionate and contrary to EU law, specifically the free movement of capital.

• Current regime (2022-present): Spain reformed the penalty system. Late filing now carries standard tax procedure penalties (EUR 20 per data item, minimum EUR 300). The unjustified capital gains presumption still exists but is now subject to the standard 4-year statute of limitations, and taxpayers can provide evidence of legitimate acquisition.

Practical Tips for Expats

Consolidate before you move. If possible, simplify your foreign asset structure before becoming a Spanish tax resident. Fewer accounts and holdings means simpler reporting.

Keep acquisition records. For real estate and investments held before moving to Spain, maintain clear documentation of purchase dates and prices. This protects you if the tax agency questions the origin of assets.

Use a gestor or tax advisor. The Modelo 720 filing is technical and errors can trigger audits. Professional help typically costs EUR 150-400 and is well worth it.

Remember the EUR 50,000 threshold is per category. You could hold EUR 49,000 in foreign bank accounts and EUR 200,000 in foreign securities and only need to report the securities category.

Track your crypto. Cryptocurrency held on foreign exchanges falls under the securities/funds category. Spain has been increasingly vigilant about crypto asset reporting since 2024, and a dedicated crypto reporting form (Modelo 721) now applies to holdings on foreign platforms exceeding EUR 50,000.