Form 714: Wealth Tax

Form 714 is a document used by the Spanish government to assess and collect taxes on certain assets deemed to be wealth. This form must be completed by individuals who have a certain amount of taxable holdings in Spain. 

In this article, we will explore Form 714 and provide an overview of the wealth tax implications in Spain. ​​Understanding what this form is and how it works can ensure you are paying your taxes correctly and on time.

What is the Form 714?

Form 714 is a wealth tax return, i.e. it taxes the net wealth of individuals. It takes into account the value of the taxpayer’s assets, both in terms of rights and assets. 

Particular attention should be paid to the economic parameters that determine whether a taxpayer is required to file a tax return or not.  It applies at the national level, although income is distributed to autonomous communities.

Preparation and filing of Form 714

Taxpayers are required to file a Form 714 (whether the liability is personal or real) if any of the following circumstances occur:

  • The tax liability incurred must be paid following the rules applicable to this Form 714 (taking into account any deductions or allowances already made).
  • For the first limit of the liability, account must be taken of whether the established taxable base is equal to or less than the prescribed minimum allowance, which is normally €700,000, or the aforementioned allowance approved by the Autonomous Communities for their residents (€500,000 in Catalunya).
  • If the above-mentioned situations do not exist, the proven value of their assets and rights, whether exempt or not, without taking into account personal encumbrances, encumbrances, debts and liabilities, is more than €2,000,000.

Persons who die during the fiscal year do not have to declare this tax.

Form 714 consists of 10 sections and a payment slip:

General information (section 1): identification details of the taxpayer, tax year, special tax regime, the economic regime of marriage, the autonomous community of residence, supplementary declaration and whether it is made by the person concerned or by a representative.

Assets, rights and debts (sections 2-8): The various components of assets are stated here, indicating their nature, exemption and attribution to economic activity, deposits in a current account, securities representing capital transfers to third parties, etc.

Summary of the net assets constituting the tax base (sections 9-10). This part will be completed automatically if the items in the previous sections according to their classification are included.

Finally,  a payment document in which the method of payment can be specified (direct debit or invoice payment) and the account number to which the payment is to be made.

Remember that Form 714 must be completed electronically by each taxpayer.

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How is Wealth Tax calculated?

The taxable base for wealth tax is calculated by adding up all the assets and rights and subtracting the debts that the taxpayer has accumulated during the year and up to the last day, the day of accrual, as in the case of inheritance tax.

At the state level, the characteristics for calculating the wealth tax are as follows:

  • A tax allowance of €300,000 for the taxpayer’s principal residence.
  • The minimum allowance is €700,000 for resident taxpayers and non-resident taxpayers.
  • Taxpayers whose tax liabilities are payable, or if the value of assets and rights exceeds €2,000,000, must file a tax return even if there is no amount to pay
  • Family businesses (companies or sole proprietorships) and shares in companies classified as family businesses are exempt from tax as long as the legal requirements are met.

In addition, the particularities of each autonomous community must be taken into account and applied in priority. In other words, the tax rates and incentives of the autonomous community of which the taxpayer is a resident shall take precedence.

Non-resident taxpayers must take into account only assets located in Spain. They can also be benefited from the legislation approved in the autonomous community about this tax. 

Conclusion

In conclusion, the Spanish Wealth Tax is an important part of the Spanish tax system and form 714 is a critical part of that process. Filing the form correctly and on time can save individuals and businesses thousands of euros in taxes. 

Understanding the wealth tax and how to use form 714 will help ensure everyone pays what is due while not overpaying. It’s important to remember that ignorance of the law does not excuse anyone from their obligations.

Taxpayers should consult a professional advisor or tax expert to ensure they are accurately filling out form 714 and calculating their wealth tax correctly. Contact our tax advisors in Barcelona regarding this topic.

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