The wealth tax in Spain was introduced for the first time in 1978 as by law 50/1977, of 14 November. The same was introduced as urgent measurement for a fiscal reform (B.O.E. of 16 November), developed by the Spanish Ministerial order of 14 January 1978 (BOE 17 January) that established the wealth tax for individuals (IEPPF) had an extraordinary status. Spain was on his initial steps of democracy and the existence of a progressive tax system had to be proven.
Initially this wealth tax was not introduced for collecting additional taxes only as a high minimum asset value was exempt (4.000.000 pesetas of the time) and, in addition, there was a relevant overall reduction (6 M de pesetas). The tax rate was relatively small, with a maximum of 2%. The target of this Spanish Wealth Tax was basically for controlling Spanish assets purposes being this complementary to the Spanish Income tax. In fact, as mentioned by statistics, few people were declaring, in those times, this tax in Spain.
The first important change occurred in 1988, introduced by the changes at the personal income tax to suit the requirement of individual taxation established by judgement of the Spanish Constitutional Court (S.T.C. No. 45/1989, of 20 February).
With the amendments of Spanish personal income tax in 1991 also appeared a change in the wealth tax, Spanish law 19/1991 of June 6, (BOE, June 7), a set of relevant amendments on previous regulations, some related to the incorporated in the law 18/1991, concerning the Spanish income tax as well as the individualization of the same.
And so we came up to year 2007, which was the last in which this tax was paid in present times. Spain lived a time of rapid and sustained economic growth.. Starting financial year 2008, the Spanish wealth tax was not “deleted” but a bonus of 100% was introduced in the Law. Meaning this that no wealth tax had to be declared any more. This drastic change was mainly introduced as by the pressures from what was happening in the European tax environment.
Nevertheless, the economic crisis and the lack of funds of the Spanish Inland Revenue, reactivated the wealth tax from exercise 2011 (payable in 2012), although it was promised by law that this tax would only affect the fiscal years 2011 and 2012 (Single article Royal Decree-Law 13/2011 of September 16,2011) that was reinforcing the wealth tax in Spain.
In this situation we find ourselves in today, but all indications are that these promises will turn into false by adjustments to be carried out and, apparently, the Presupuestos Generales del Estado ( The Spanish State General Budgets) for 2013, which just arrived at the Spanish Parliament the past 29 September, extended the wealth tax, who knows if even for future periods.
Please do not hesitate to contact Arcos & Lamers Asociados in the event you own already a property in Spain and/or you wish to learn more on your Tax Liabilities in Spain. Arcos & Lamers Asociados is an English speaking law firm that entitles lawyers, tax advisers and registered accountants and economists. Arcos & Lamers Asociados, your wealth tax specialists in Spain. Accountants in Spain. Spanish accountants. Telf:+34952775010 /Fax:+34952900577
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