Wealth Tax For Non-Residents In Ibiza
Wealth Management
We explain how non-residents can benefit from this legislation, analysing the details of how the tax is calculated, the situations that have led to overpayments and the steps that can be taken to reclaim what is due.
Understanding these options is essential not only for proper financial planning, but also to ensure that every taxpayer’s right to fair taxation is respected.
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Wealth Tax For Non-Residents In Ibiza
Are you a non-resident of Spain for tax purposes and have property or other assets that you need to declare for Spanish wealth tax?
A recent 2023 ruling by the High Court of Justice of the Balearic Islands could mean significant savings on your wealth tax.
Until now, non-resident Spanish taxpayers have faced a disproportionate tax burden compared to resident Spanish taxpayers.
However, this new ruling states that certain tax limits that apply to residents should also apply to non-residents.
This means that many non-residents may have paid more tax than they were entitled to.
Want to know if you are entitled to a refund? Read on to find out how this ruling can help you.
Wealth Tax For Non-Residents: What is wealth tax?
Wealth tax is a tax levied on individuals on the total value of their assets as at 31 December each year.
These assets can include property, vehicles, bank accounts, investments and more.
In other words, it is your net worth that is taxed, not your annual income, as is the case with income tax..
The 60% limit for Spanish residents
In order to protect Spanish residents from excessive tax burdens, the law sets a limit: the sum of income tax and wealth tax cannot exceed 60% of the taxable income.
Example: If a Spanish resident has a taxable income of €33,000 and pays €5,300 in income tax and €15,500 in wealth tax, the 60% limit is exceeded. In this case, the wealth tax would be reduced in order not to exceed this limit.
Until now, this 60% limit did not apply to non-residents, which created a clear disadvantage and unequal treatment.
The new ruling: an opportunity for non-residents
The recent ruling by the High Court of Justice of the Balearic Islands found that the denial of this benefit to non-residents was contrary to European rules on the free movement of capital.
This means that non-residents who have overpaid wealth tax in the last four years can apply for a refund.
Who is affected by this judgment?
This ruling applies to all non-residents of Spain who have paid wealth tax in the last four years and who meet the conditions laid down by law.
FAQs
How do I know if I am affected by this ruling? We will need to analyse your specific tax situation to see if you are eligible for a refund.
How much money can I get back? The amount recoverable will depend on your particular situation and the amount of tax overpaid.
What do I need to do to claim? We will advise you on the steps to take and represent you in the claim process.
How long do I have to make a claim? In principle, it is usual to file a Wealth Tax return before 30 June each year, so you have until 30 June to claim tax for the previous four years.
Wealth Tax For Non-Residents: What to do now?
If you think this ruling may apply to your case, please do not hesitate to contact us.
We will offer you an analysis of your situation and explain the steps you need to take to recover the money you are entitled to.
At Almar Lawyers we can assess the viability of each case and recover the overpaid fees.
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