Wealth tax in Spain 2026: rates, exemptions and how to reduce your liability

Spain’s wealth tax — Impuesto de Patrimonio (IP) — is an annual tax on the net value of assets above a certain threshold. It applies to Spanish tax residents on their worldwide assets, and to non-residents on assets located in Spain. The filing deadline is 30 June each year for the previous tax year, using Modelo 714.

The practical picture in 2026 is more complex than a simple rate table suggests. The introduction of the Solidarity Tax on Large Fortunes in 2022 changed the regional landscape significantly. Changes to the rules on foreign companies holding Spanish property in the same year created new obligations for non-resident shareholders that many are still unaware of. And several legitimate planning strategies — properly applied — can reduce the taxable base meaningfully. This guide covers all of it.

What is Spanish wealth tax and who pays it?

The Impuesto de Patrimonio is levied annually on the net value of an individual’s assets — total assets minus deductible liabilities — above the applicable exemption threshold. The tax is calculated on the value of assets as at 31 December each year.

Assets subject to IP include real estate, bank deposits, investments, vehicles, jewellery, art, and business interests not covered by specific exemptions. Deductible liabilities include mortgages and other debts directly linked to taxable assets — subject to the conditions discussed below.

Certain assets are exempt, most notably the primary residence of Spanish tax residents, up to a value of €300,000. Business assets that meet specific activity and management requirements are also exempt, as are pension plans recognised under Spanish law.

Wealth tax rates in Spain: the state scale

In the absence of a more favourable regional scale, the national state scale applies. It is progressive, starting at 0.2% and rising to 3.5% on the portion of net wealth above €10,695,996:

These are marginal rates applied to each bracket — the overall effective rate is lower than the top marginal rate. Most autonomous communities apply their own scales, which can be significantly different from the state scale.

Regional wealth tax rules: where you pay and how much

Wealth tax in Spain is substantially shaped by regional rules. Autonomous communities can modify the threshold, the scale, and the bonuses applied. The variation is significant:

The Solidarity Tax on Large Fortunes: what it is and why it was created

The Impuesto de Solidaridad sobre las Grandes Fortunas (ISGF) was introduced by the national government at the end of 2022 and came as a surprise to many taxpayers and advisers. Its purpose was explicitly political: several autonomous communities — most notably Madrid — had applied a 100% bonus to wealth tax, meaning their residents paid nothing. The national government introduced the ISGF as a floor, imposing a minimum effective wealth tax across all of Spain regardless of regional rules.

The ISGF applies to net wealth above €3,000,000 at the following rates:

• €3,000,000 – €5,000,000: 1.7%
• €5,000,000 – €10,000,000: 2.1%
• Above €10,000,000: 3.5%

A key feature is that IP paid in the same year is fully deductible from the ISGF quota. The two taxes are designed to overlap rather than stack: the ISGF effectively tops up to a minimum level, and the IP paid offsets against it. The communities that previously offered 100% IP exemptions responded by restructuring their bonuses: instead of eliminating IP entirely, they now apply a bonus equal to the ISGF amount that would have been payable — effectively making IP zero up to the ISGF threshold, while allowing the ISGF itself to apply above €3,000,000.

The practical result across most of Spain is that below approximately €3,700,000 in net wealth, the combined IP and ISGF burden is very low or zero in the most favourable regions. Above that level, the ISGF applies, though the deductibility overlap means the effective combined rate is not as high as headline figures suggest.

Deductible debts: reducing the wealth tax base

The wealth tax is levied on net wealth — assets minus liabilities. Properly documented debts directly linked to taxable assets can therefore reduce the base and the resulting liability. The most common example is a mortgage on Spanish property: the outstanding balance reduces the net value of the property included in the IP calculation.

Other deductible debts include loans used to finance the acquisition or improvement of taxable assets, provided the connection between the debt and the asset is clear and documented. Personal debts with no direct link to a specific taxable asset are generally not deductible.

Debts owed to your own companies: a significant risk

A situation that arises in planning discussions — and that carries real audit risk — is the deduction of debts owed to companies in which the taxpayer holds a significant ownership interest. The logic is superficially attractive: if you owe money to a company you own, that debt reduces your personal net wealth for IP purposes.

Hacienda approaches these arrangements with significant scepticism. The AEAT can — and does — challenge debts owed to related companies on the grounds that they lack genuine commercial substance: that they were created specifically to reduce the IP base rather than arising from a real economic transaction. Where this challenge succeeds, the debt is disallowed and the full asset value is included in the taxable base, with interest and surcharges applied to any underpayment.

This does not mean that all debts to related entities are automatically disallowed. Genuine commercial transactions properly documented — for example, a real loan at market interest rates for a genuine business purpose — can withstand scrutiny. The problem is structures that are created primarily for tax purposes without genuine economic substance. If you are considering this type of arrangement, professional advice is essential before implementation.

Ownership structures: usufruct, bare ownership and joint titling

The way in which assets are held affects how they are valued for IP purposes, which creates legitimate planning opportunities — particularly for family wealth transfers.

Usufruct and bare ownership

Spanish law recognises the separation of usufruct (usufructo) — the right to use and enjoy an asset — from bare ownership (nuda propiedad) — the title to the asset itself. When these two elements are held by different people, the IP liability is split between them according to specific valuation rules.

The usufructuary (the person with the right to use) declares the asset at a value calculated based on their age — the older the usufructuary, the lower the value attributed to the usufruct right, since the expected remaining duration is shorter. The bare owner declares the residual value. The total declared value is always equal to the full value of the asset, but the split between the two holders can result in a materially lower IP base for each individual — particularly when the usufructuary is elderly and the bare owner is younger with a lower overall wealth base.

This structure is often used in family succession planning: parents retain the usufruct on property during their lifetime, transferring bare ownership to their children. The IP and inheritance tax implications of this arrangement need to be assessed together — the planning benefit on one tax can be partially offset by the treatment on the other.

Joint titling between spouses or partners

Where assets are jointly held, each co-owner declares their proportionate share. For a couple where one partner has significantly higher wealth than the other, transferring a share of high-value assets to the lower-wealth partner can reduce the overall IP burden — since the €700,000 threshold applies per person, and progressive rates are applied individually to each holder’s share.

Any transfer of assets between spouses or partners may trigger other tax considerations — including gift tax and, where property is involved, stamp duty — so the net benefit needs to be calculated holistically rather than in isolation.

Foreign companies holding Spanish property: the 2022 legislative change

This is the area of Spanish wealth tax that has changed most significantly in recent years and that remains least understood by affected taxpayers.

Hacienda had long sought to include in the IP base the value of shares in foreign companies whose main assets were Spanish property. Its argument was based on double taxation treaties — specifically the provisions allocating taxing rights over shares whose value derives primarily from immovable property. However, Spanish courts repeatedly rejected this interpretation, and in 2021 Hacienda formally accepted the judicial criterion: shares in a foreign company were not considered assets “located in Spain” for IP purposes, even if the underlying assets were Spanish real estate. This meant that non-resident shareholders holding Spanish property through foreign structures were not subject to Spanish wealth tax on those holdings.

Rather than accepting this outcome, the Spanish legislature acted. At the end of 2022, Congress amended the law directly to override the judicial position. Under the new rules, if more than 50% of a foreign company’s asset value consists of property located in Spain — assessed at market value under wealth tax valuation rules — non-resident shareholders must include the full value of their shareholding in their Spanish wealth tax return. The relevant asset for IP purposes is the value of the shares, not the underlying property directly.

The 50% test and why it is complex

Determining whether the 50% threshold is met requires a full revaluation of all the company’s assets — but not in the way one might assume. Spanish property held by the company is valued according to the IP valuation rules, which use specific reference values rather than open market prices. The rest of the company’s assets, however, must be restated at current market value.

This distinction matters significantly in practice. A company whose balance sheet shows Spanish property at historical cost alongside other assets at book value may appear to be well below the 50% threshold. But once the non-property assets are restated to market value — which may be higher or lower than book — the proportion attributable to Spanish property can shift materially. In some cases the threshold is clearly exceeded; in others it is clearly not. The most sensitive situations are those where the Spanish property represents somewhere close to 50% of total assets, since relatively modest changes in the valuation of other assets can push the company above or below the threshold — and that margin creates genuine scope for technical analysis and, where appropriate, professional argument.

The calculation must be performed for each tax year as at 31 December, since asset values and compositions change over time. If you hold Spanish property through any foreign company structure, this assessment should be carried out annually rather than assumed to remain constant.

The 60% combined tax limit

Spanish law provides a cap — the límite conjunto — that prevents the combined income tax and wealth tax burden from exceeding 60% of the taxable income base. If the sum of income tax and wealth tax exceeds 60% of income, the wealth tax element is reduced to bring the combined total to that threshold.

For non-residents, the income tax figure used in this calculation is not limited to IRNR paid in Spain. It also includes the income tax declaration made in the country of residence — meaning the full worldwide income tax burden is taken into account when assessing whether the 60% cap applies. This is an important nuance: a non-resident with modest Spanish income but a significant income tax liability in their home country may find that the combined charge already exceeds 60% when both figures are included, producing a meaningful reduction in the Spanish wealth tax owed.

This limit was historically only available to residents. Following a recent court ruling, it has been extended to non-residents as well. For non-residents with high-value Spanish property relative to modest annual income — for example, a retired non-resident owner of a high-value holiday property — this can result in a meaningful reduction in the wealth tax owed. The calculation requires knowing both the IRNR liability, the home country income tax declaration, and the IP liability for the same year, and applying the cap correctly requires professional assistance.