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📊 Wealth tax calculation breakdown
The Wealth Tax (Impuesto sobre el Patrimonio) is a direct, personal tax in Spain levied on the net wealth of individuals on 31 December of each year. It is regulated by Law 19/1991 of 6 June, and its revenues are fully delegated to the Autonomous Communities, which have the power to modify the tax-free allowance, change the progressive tax rates, and introduce credits. This leads to a massive regional divide: while regions like Madrid, Andalusia, Cantabria, the Balearic Islands, and Murcia apply a 100% tax credit (making the final tax bill zero), others like Catalonia, the Valencia Region, and Extremadura apply steep progressive rates and reduced tax-free allowances of €400,000 to €500,000 (compared to the standard national threshold of €700,000). Furthermore, in 2026, the tax coexists with the federal Solidarity Tax on Large Fortunes, designed to offset the 100% regional credits for individuals with net assets exceeding €3 million.
🔍 How is Wealth Tax calculated in Spain?
The calculation follows four main stages:
- Gross wealth valuation: Summing the value of all the taxpayer’s assets and rights (real estate, cash deposits, shares, investment funds, life insurance policies, vehicles, art, etc.).
- Exemptions (Deductions):
- Deducting the value of the taxpayer’s primary residence up to a maximum of €300,000.
- Deducting other legally exempt assets (e.g. shares in qualifying family businesses where the taxpayer works and derives their primary income).
- Tax-free allowance deduction: Subtracting the allowance set by the Autonomous Community. The standard national allowance is €700,000, but Catalonia and Valencia reduce it to €500,000, and Aragon to €400,000.
- Tariff and regional credit application: The resulting taxable base is applied to the progressive tax scale (ranging from 0.2% to 3.5%). Once the gross tax is calculated, regional credits or bonuses are applied.
👪 Regional tax-free allowances & credits 2026
The regional tax rules dictate the final tax liability:
| Autonomous Community | Tax-free allowance | Regional tax credit |
|---|---|---|
| Madrid | €700,000 | 100% bonus (Zero Wealth Tax)* |
| Andalusia | €700,000 | 100% bonus (Zero Wealth Tax)* |
| Balearic Islands | €700,000 | 100% bonus (Zero Wealth Tax)* |
| Murcia | €700,000 | 100% bonus (Zero Wealth Tax)* |
| Cantabria | €700,000 | 100% bonus (Zero Wealth Tax)* |
| Galicia | €700,000 | 50% bonus (50% tax reduction) |
| Catalonia | €500,000 | No bonus (Rates 0.21%–3.48%) |
| Valencia Region | €500,000 | No bonus (Rates 0.25%–3.50%) |
| Extremadura | €500,000 | No bonus (Rates 0.30%–3.75%) |
| Aragon | €400,000 | No bonus |
| Rest of Spain (Standard) | €700,000 | No bonus (National rates 0.2%–2.5%) |
*Note: Although your Wealth Tax bill is zero in Madrid or Andalusia due to the 100% credit, if your net wealth exceeds €3,000,000, you will still be subject to the federal Solidarity Tax on Large Fortunes.
📝 Worked examples
Example 1: High net worth in Madrid (100% credited)
Profile: Antonio lives in Madrid and owns assets valued at €1,500,000 (including his primary residence valued at €400,000).
- Primary residence deduction: –€300,000 (maximum limit)
- Net taxable wealth: €1,200,000
- Tax-free allowance (Madrid): –€700,000
- Taxable base: €500,000
- Calculated progressive quota: €1,664.37
- Regional bonus (Madrid - 100%): –€1,664.37
Example 2: Same net worth in Catalonia (Allowance €500k)
Profile: Carmen has the exact same assets of €1,500,000 (with a primary residence valued at €400,000) but resides in Barcelona.
- Primary residence deduction: –€300,000
- Net taxable wealth: €1,200,000
- Tax-free allowance (Catalonia): –€500,000
- Taxable base: €700,000
- Calculated progressive quota (Catalan scale): €2,347.56
- Regional bonus (Catalonia): 0%
Carmen pays over €2,300 annually, while Antonio pays zero for the exact same wealth, purely due to regional tax differences.
Example 3: Net worth of €1,200,000 in Galicia (50% bonus)
Profile: Manuel has net assets (after primary residence deduction) of €1,200,000 in La Coruña.
- Tax-free allowance (Galicia): –€700,000
- Taxable base: €500,000
- Calculated progressive quota (General scale): €1,664.37
- Regional bonus (Galicia - 50%): –€832.18
⚠️ Common mistakes
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Not filing when the tax bill is zero: You are legally required to file a Wealth Tax return (Form 714) if your gross assets (without subtracting debts) exceed €2,000,000, even if your final tax bill is zero due to regional allowances or credits.
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Valuing property at current market value: Real estate must not be declared at estimated market value. The law states that you must declare the highest of three values: the cadastral value, the purchase price, or the value determined by the tax authority for other tax purposes.
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Missing the family business exemption: Many business owners are unaware that they can fully exempt their shares in a family company from Wealth Tax, provided they own at least 5% (or 20% collectively with family), exercise direct management, and draw a salary representing over 50% of their total income.
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Ignoring the joint IRPF-Wealth Tax limit: Spain applies an “income/wealth tax cap” (limite conjunto): the combined total of your IRPF (income tax) and Wealth Tax bills cannot exceed 60% of your IRPF taxable base. If it does, your Wealth Tax bill is reduced by up to a maximum of 80%.
💼 Special cases
Family business exemption
Shares in commercial companies (such as an S.L. or S.A.) are exempt from Wealth Tax if the company is actively trading, the taxpayer owns at least 5% of the company (or 20% collectively with a family group), actively manages the business, and derives a salary that represents more than 50% of their total personal and business income.
Federal Solidarity Tax on Large Fortunes
Established by Law 38/2022, this is a national surcharge applying to individuals with net wealth exceeding €3,000,000. It applies a progressive scale (1.7% to 3.5%) and allows taxpayers to fully deduct any Wealth Tax paid to their Autonomous Community. In regions with a 100% Wealth Tax credit (like Madrid or Andalusia), the taxpayer pays the difference directly to the federal government, effectively capping the regional tax savings for fortunes over €3 million.
❓ Frequently Asked Questions (FAQ)
You must file a Wealth Tax return (Form 714) if you have tax to pay. In addition, you must file if your gross assets (without deducting mortgages or liabilities) exceed **€2,000,000**, regardless of whether the final tax due is zero.
Under national rules, your primary residence is exempt up to a maximum value of **€300,000** per owner. If a married couple owns a home jointly (50% each), they can deduct up to **€600,000** of the home's value in total. Any value exceeding this limit is taxed normally.
No. Wealth Tax is a regional tax managed by the Autonomous Communities with varying rates and exemptions. The Solidarity Tax on Large Fortunes is a national tax applying only to net fortunes above **€3,000,000**. The Large Fortunes Tax deducts what you already paid in regional Wealth Tax to prevent double taxation.
Listed shares and investment fund units are valued using their **average trading value during the fourth quarter** of the year, which is published annually by the Ministry of Finance in the BOE. Unlisted shares are valued based on the book value from the latest audited balance sheet.
Yes, within specific limits. Art and antiques are exempt if their value is below statutory thresholds (e.g. €60,000 for unique paintings or €18,000 for jewellery). Items officially registered as Assets of Cultural Interest (BIC) are fully exempt regardless of value.
It is a constitutional safeguard to prevent excessive taxation: the combined total of your annual IRPF and Wealth Tax bills cannot exceed **60%** of your total IRPF taxable base. If this limit is exceeded, your Wealth Tax bill is reduced by up to **80%**.
Yes. The Wealth Tax is assessed on your **net wealth**. This means you deduct mortgages, loans, and other personal liabilities from your gross asset value. If you own an apartment worth €500,000 but have an outstanding mortgage of €200,000, only **€300,000** is counted for tax purposes.
The filing period for Wealth Tax coincides exactly with the annual Spanish IRPF (income tax) campaign, which runs from **early April until June 30th** each year. Form 714 must be submitted electronically via the tax office portal.