Extension of Wealth Tax: What will happen in 2019?
Wealth Tax is a direct and personal tax that taxes the wealth of natural persons, calculating the value of all assets of the taxpayer. It is a tax whose yield is assigned to the Autonomous Communities, in addition to being able to apply the rate, reductions and bonuses that they decide.
Next we are going to explain to you who will have to declare the Wealth Tax in 2018, which are the differences between different Autonomous Communities like Catalonia and Madrid, and what will happen in 2019.
Who has the obligation to pay the Wealth Tax?
The Wealth Tax is a temporary tax. In 2008, the government suppressed it but it had to recover in 2011 in the middle of the economic recession, since it represents a very important collection for the Autonomous Communities. Although initially it was only going to extend 2 years, it is still paid in 2018 through the Form 714.
Paying the Wealth Tax (or not) will depend on the joint valuation of the taxpayer’s assets. In most of the Autonomous Communities, those whose income is equal to or greater than 700.000 Euros must face it, although there are exceptions, as we will see below.
Spanish taxpayers must declare their assets and rights they have both in Spain and abroad (personal obligation). On the other hand, those who are considered Non-Residents for tax purposes in Spain will only have to declare those goods and rights they have in Spain (real obligation).
Wealth Tax in Catalonia and Madrid
As we have already mentioned, each autonomous community has the power to decide how it wants to apply the Wealth Tax. The Communities of Madrid and Catalonia are at opposite poles.
In Catalonia there is no bonus applied to the Tax, and the minimum threshold is 500.000 Euros, instead of the 700.000 Euros that most other communities have. This causes that this is the Autonomous Community in which there are more taxpayers.
On the other hand, the Community of Madrid offers a bonus of 100%, so that no taxpayer in this territory has to pay for the Wealth Tax, although they have to file it if the goods and rights exceed the value of 2.000.000 Euros.
Other communities that have regulated a specific minimum threshold are Aragon (400.000 Euros), Extremadura (500.000 Euros) or the Comunidad Valenciana (600.000 Euros).
Wealth Tax in 2019?
As we have said before, the Wealth Tax was planned as temporary, but year after year it has been “renewed”. Therefore, until the General State Budgets for 2019 are approved, it won’t be known if it will have to continue paying the Wealth Tax or if it will suffer modifications.
Whether the renewal of the Wealth Tax ends up approving in the next budgets or not, contact us if you need advice in relation to your tax obligations. We will treat your case in a personalized and professional way.