10/11/20

EUROPE: Spain introduces wealth tax increase along with numerous anti-avoidance measures.

As published on step.org/industry-news, Monday 9 November, 2020.

The Spanish government has announced a 1 per cent increase in the highest wealth tax band, raising the levy on assets above EUR10.7 million to 3.5 per cent.

Depending on whether the Bill on the National Budget is gazetted before or after December 31 2020, the increase will take effect either in the 2020 or 2021 tax years, affecting Spanish autonomous communities that have not approved their own wealth tax rates. It will remain in force indefinitely.

A new law on measures to prevent tax fraud, the Bill on Measures to Prevent and Combat Tax Fraud, has also been introduced to parliament, including a new obligation to disclose virtual currency holdings and a EUR1,000 limit on cash payments. The effective date for these new measures could also apply to personal income tax and wealth tax for the 2020 financial year if passed before 31 December 2020, although in practice the Bill is unlikely to be passed in time.

The obligation to disclose virtual currencies applies to those who hold virtual currencies abroad, as well as those who provide related services in Spain. It also applies to those who have the status of beneficiary or authorised party or who otherwise hold a power of disposal.

Transposition of the EU Anti-Tax Avoidance Directive (ATAD) is also envisaged, introducing the measures concerning international tax transparency and exit taxation.

Non-resident individuals who inherit or are gifted assets located in Spain are to be granted the same tax reliefs as Spanish residents, due to a recent supreme court decision by which the autonomous regional governments' previous discriminatory tax practices against non-residents were declared unlawful. Individuals resident either inside or outside the European Union who have been denied these tax reliefs can now claim refunds going back four years or more.

Further, Spanish domestic exemptions on interest payments and capital gains that currently apply to EU taxpayers are being extended to residents in the European Economic Area.