Direct Taxes

Wealth Tax (OZ) (2018 Campaign)

Replacing Tax on Wealth and Large Fortunes (AFHZ) after the 2017 campaign

Type of Tax

Direct

Collected by

Provincial Government

Paid by

Natural persons

Tax base

Goods and rights of an economic nature, minus any encumbrances or liens that reduce their value, and with the deduction of the personal debts and obligations for which there is liability.

Abatements in the base

Reduction of € 700,000. See abatements in the summary table 2018

Net tax base

Calculated by subtracting the corresponding abatements from the tax base (see summary table 2018).

Tariff or Rate

See net tax base rate in the summary table 2018

Liability

Calculated by applying the tax rate to the net tax base.

Deductions

See deduction for taxes paid abroad in the summary table 2018

Amount payable

Calculated by subtracting the corresponding deductions from the tax liability.

Since financial year 2018, it has been mandatory to declare Wealth Tax. Between 2013 and 2018 years was in force the Tax on Wealth and Large Fortunes. This was repealed when the new Customary Law 2/2018, of June 11, of the Wealth Tax came into force on June 20, 2018.

In addition, the previous financial years prior 2013 the Wealth Tax was also in force.

This tax is direct and personal and is levied on the wealth of natural persons. It accrues on 31 December of each year and is levied on the wealth owned by the taxpayer on that date. The tax is collected by the Provincial Government of Gipuzkoa.

What is this tax levied on?

The wealth of the natural person, the entirety of the goods and rights of an economic nature they possess, minus any encumbrances or liens that reduce their value, and deducting any personal debts and obligations for which same is liable.

Who is required to declare this tax?

Residents in Gipuzkoa who are in the following circumstances are required to sign up to and declare this tax:

  • When the net tax liability, calculated in accordance with the regulatory rules governing the tax, is positive (to be paid in).
  • When the value of his or her goods and rights, including those exempt from tax, and determined in accordance with the regulatory rules of the tax are greater than 3 million euro.

When they reside outside the territory of Gipuzkoa but the goods are in Gipuzkoa, there is a 'real obligation' (tax liability by virtue of property, assets, etc. maintained in the tax jurisdiction) to declare the tax and it will be applied as follows.

How is the amount payable calculated?

Goods:

  1. Tax Base: The taxpayer must declare all goods and rights of an economic content owned by him/her deducting the personal debts and obligations for which he/she is liable. The persons listed in the table are exempt from the charging of this tax: Goods and rights exempt from taxation.
  2. Abatements in the base: €700,000
  3. Net Tax Base: Calculated by subtracting the corresponding abatements from the tax base.
  4. Tariff or Rate: Percentage to be applied to the net tax base. To determine the percentage to be applied, see Net tax base rate
  5. Liability: Calculated by applying the corresponding tax rate to the net tax base.
  6. Deductions: The lesser of the following two quantities:
  • The amount paid abroad by reason of a charge of an analogous nature to this tax.
  • The result of applying the average rate of this tax to the portion of the net tax base taxed abroad.
  1. Amount payable:  Calculated by subtracting the corresponding deductions and allowances from the tax liability.

 


Example

Xabier, a 62-year-old salesman resident in Zumaia, has assets worth €4,000,000 including his usual home and the retail premises where he works. The former is valued at 500,000€ and the latter at €650,000. He also has to meet a debt of €100,000 to pay another property he owns.

  1. Total assets: 4,000,000€
  2. Exempt assets: 650,000€ (retail premises where he works)
  3. Tax base: Because the value €3,350,000 is greater than €3,000,000, Xabier has a personal obligation to declare this.
  4. We subtract his debts: 3,350,000 - 100,000 = €3,250,000
  5. For his usual home we subtract a maximum amount of €300,000: 3,250,000 - 300,000 = 2,950,000€
  6. Abatements in the tax base: €700,000 abatement.
  7. Net tax base: 2,950,000 - 700,000 = €2,250,000€.
  8. Rate: to calculate the rate, go to the €1,600,000 row. The amount to be paid on this is 10.200€. The rest (2,250,000€ - 1,600,000€ = 650,000€) is taxed at 1.30%, which is 8.450€ (650,000€ x 1.30%)
  9. Total tax liability = 10,200 + 8,450 = €18,650€
  10. Deductions: In this case there are no deductions.
  11. Amount payable: 18,650€

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