# patrimonio / wealth tax - only owned real estate in Spain?



## libove (Feb 24, 2008)

I've read the English language Spanish Income Tax document, and many other Spanish language documents about taxes in Spain.

The English language Spanish Income Tax document says that foreigners who expatriate in to Spain and elect non-resident income tax status are subject to non-resident Wealth Tax (Patrimonio, right?) rates.

So I'm trying to figure out just what kinds of Wealth are included in the Patrimonio / Wealth Tax.

It looks like it is just real estate - owned homes / apartments - in Spain. Not rental apartments, and not real estate owned outside of Spanish territory.

Am I right?

If so, since I don't expect to ever buy real estate in Spain, the patrimonio will not affect me. Right?

Thanks!
-Jay


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## Stravinsky (Aug 12, 2007)

libove said:


> I've read the English language Spanish Income Tax document, and many other Spanish language documents about taxes in Spain.
> 
> The English language Spanish Income Tax document says that foreigners who expatriate in to Spain and elect non-resident income tax status are subject to non-resident Wealth Tax (Patrimonio, right?) rates.
> 
> ...



It applies to real estate, Personnal effects, automobiles, stocks and shares, life assurance & your bank accounts. Basic exemption of €15956.87


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## libove (Feb 24, 2008)

Thank you. Is there a place (hopefully in English, Spanish otherwise) where I can read the full details and regulations about the patrimonio?

I need to understand, for example, whether "stocks and shares" includes non-Spanish accounts, how personal effects are to be valued, whether "life insurance" includes only "whole life" or also "term life", whether bank accounts include non-Spanish accounts, etc. Such a tax was declared unconstitutional in my home state of Georgia, US a few years ago :} Oh well.

Thanks!
-Jay


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## Bevdeforges (Nov 16, 2007)

One thing to be careful about when trying to sort out your tax situation in Spain (or anywhere in Europe) - the term "life insurance" in Europe refers to a type of long-term investment fund. Very often you'll find that "life insurance" premiums are deductible from income for taxation.

I'm not sure the US style "term insurance" exists in much of Europe (or if it does, I'm not sure it's called "life insurance" at all).

And forget about wealth tax being "unconstitutional" (Georgia constitution or US constitution, I wonder?). It's rather popular over here! Or you could move to Belgium to escape it (but Belgian income taxes are REALLY horrendous).
Cheers,
Bev


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## Stravinsky (Aug 12, 2007)

libove said:


> Thank you. Is there a place (hopefully in English, Spanish otherwise) where I can read the full details and regulations about the patrimonio?
> 
> I need to understand, for example, whether "stocks and shares" includes non-Spanish accounts, how personal effects are to be valued, whether "life insurance" includes only "whole life" or also "term life", whether bank accounts include non-Spanish accounts, etc. Such a tax was declared unconstitutional in my home state of Georgia, US a few years ago :} Oh well.
> 
> ...


I'm having a senior moment here libove
I've just given you details for IHT, not welath tax. I'll re post ... sorry, trying to catch up after a power failure


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## Stravinsky (Aug 12, 2007)

Now ........

Wealth tax does apply to your worldwide assets.
But there are very good allowances for wealth tax if you are a resident, and as you won't have a property anywhere by the sounds of it, you'll be able to accumulate €108102 roughly before you become liable. There is an allowance for about €150k for your principal residence also. After all that the first tax rate is 0.2%, rising up to around 2.5% if you're a multi millionare  I should say that if you have a house back home that does come within the wealth tax requirements.

It also encompasses bank deposits, stocks, shares, bonds, business ownership, cars, yachts, works of art, jewels but your home furnishings are exempt!!! Morgages and debts are deductable 

I'm not sure what you mean about non resident tax status. Everything I have ever read about tax on the forums over the last few years points to the fact that if you live in Spain for more than 6 months then you become liable for tax here. I know of people who have continued to be taxed in the UK when residents here, but when the Spanish tax man caught up with them there was a demand for tax here. There is a taxation treaty between the UK and Spain so it was a case of claiming it back.

Just be sure what you think you have signed up for is correct, and you dont end up with the tax man here coming after you in a few years

Sorry about the mix up


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## Bevdeforges (Nov 16, 2007)

Stravinsky - Libove posted a site where there is a really nice write-up (in English!) of the Spanish income tax system (Agencia Tributaria)

On p. 17 of the booklet on "Non resident income tax" there is something about this special regime for "workers displaced to Spain", which is I believe what he's talking about. In that information, they say that a taxpayer who elects to be taxed under this "non resident regime" (which appears to apply - at least for the first 5 or 6 years if you meet the requirements) will be subject to Spanish wealth tax "as a non resident."

Unfortunately, I can't find anything on the site in English about the wealth tax, and the only thing I know in Spanish is "no habla".  This may be one of those cases where things are clearer in the original Spanish.
Cheers,
Bev


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## libove (Feb 24, 2008)

Thanks to both of you.

We will own one or two properties in the United States, with a gross value of around US$600,000 if we keep both, or around US$300,000 if we keep only one. (If we keep both, there will be a mortgage of about US$100,000). Will the Spanish tax man want Wealth Tax on this real estate that we own elsewhere in the world?

We will already be paying property taxes to the US for those properties. I wonder, does the double taxation treaty cover property taxes? If so, then with the Euors 150,000 exemption and relatively small starting tax rates, hopefully we will work out about the same whether paid in the US or in Spain. I assume that, because the property is in the US, the US' taxing authorities get precedence, and under the double taxation treaty I would exempt the property tax already paid to the US government from the Wealth Tax which would otherwise be due to Spain?

And as far as bank accounts, etc, what about US Individual Retirement Accounts (IRA) and 401k (company sponsored retirement) plans? That money is tax deferred in the US. It would be criminal for that to be taxable by a foreign authority, because the whole purpose of those types of retirement accounts (pension accumulation funds, if you will) is to allow the individual to invest for their own future, to be less of a burden on the state in retirement. (US Social Security pension income is significantly reduced due to income from an individual's own retirement funds).

Anyone have a good international tax accountant / attorney in Spain I can run these things by, please? I really do need to do so, and soon!

Thanks,
-Jay


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## Bevdeforges (Nov 16, 2007)

Can't help you with the real estate in the US, except to tell you that property tax is NOT covered by the tax treaties. You pay property tax based on where your property is located and that's that. (Wealth tax, if you have to pay it, is something completely different.)

The IRAs and 401Ks are funky things for international tax purposes. IF they are subject to Spanish wealth tax, it would be on the full amount you have in each fund. BUT these types of accounts actually resemble European style "life insurance" - and as such, I managed to get mine exempted from French wealth tax due to a loophole in the French wealth tax law which defines a specific kind of life insurance account that is actually a retirement account.

I'm not saying Spain has a similar loophole, but if your US assets fall subject to Spanish wealth tax (which may or may not be the case under this "non-resident" option thing), it may be worthwhile asking about this aspect. In my case, I have to declare my IRA and 401K as "foreign life insurance" on my income tax forms, which then makes them fall under the exempted category for the wealth tax. (Declaring them has no effect on the income tax due.)

Tax here works differently than in the US in many ways. But you'll find that out soon enough. 
Cheers,
Bev


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## Stravinsky (Aug 12, 2007)

Bevdeforges said:


> Stravinsky - Libove posted a site where there is a really nice write-up (in English!) of the Spanish income tax system (Agencia Tributaria)
> 
> On p. 17 of the booklet on "Non resident income tax" there is something about this special regime for "workers displaced to Spain", which is I believe what he's talking about. In that information, they say that a taxpayer who elects to be taxed under this "non resident regime" (which appears to apply - at least for the first 5 or 6 years if you meet the requirements) will be subject to Spanish wealth tax "as a non resident."
> 
> ...


Its a really grey area in spain as you often find things vary  I am aware of people who are employed by someone in, say, the UK and paid in the UK but living in Spain getting taxed in the UK. But there are also all kinds of issues about the employer having to set up a company in Spain to handle it. If the employee lives here for instance then he has no rights to the UK health system .... but of course he has no rights to the Spanish one either. So they have to set up a company to pay the health payments here. It gets complicated and I have seen so many different accounts of it


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