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If you’re a stock trader and a tax resident in Spain, proper planning can make a significant difference in your annual tax bill.

From MDG Advisors, we share four essential tips to legally and efficiently optimize your tax burden:

1. Offsetting Gains and Losses: Spain allows you to offset capital losses against gains for up to four
subsequent tax years. Keeping a detailed record of your trades is essential to take full advantage
of this benefit.
2. Timing Your Sales: Deferring the sale of profitable assets to a future tax year may reduce your tax
liability if you anticipate lower income or carry-forward losses during that period.
3. Two-Months Rule: If you incur a capital loss and purchase identical securities within two months
of the sale, that loss will not be deductible until you sell the newly acquired securities.
4. Using International Accounts: Some international brokers offer more tax-efficient structures to
avoid early withholdings or improve the quality of tax reporting. Always comply with Spain’s
foreign asset reporting obligations (Modelo 720).

Should you want to receive more tips or information, please do not hesitate to contact MDG Advisors
Pablo Mallo Bárcena – MDG Advisors

Although we are currently immersed in the income tax campaign, we cannot forget about wealth tax
(despite the 100% rebate offered in the Autonomous Community of Andalusia) and, linked to this, the tax
on large fortunes.

In this blog, we will focus on wealth tax.

Wealth tax (IP) is levied on the net worth of individuals and is a tax transferred to the Autonomous
Communities. Within the set of assets and rights subject to the tax, there are certain exemptions,
including those relating to shareholdings in entities. The purpose of this exemption is to encourage
business activity and prevent the tax from penalising productive investment.

Legal basis:
The legal basis for this exemption is found in Article 4. Eight. Two of Law 19/1991, of 6 June, on Wealth
Tax. This provision establishes the conditions that must be met for holdings in certain entities to be
exempt from taxation.

Scope of application:
The exemption may apply to:
Direct or indirect holdings in companies. However, in both types of holdings, the minimum
percentage requirement for participation in the company must be met.
Both commercial and professional companies, provided they meet the requirements.

Requirements for exemption
In order to benefit from this exemption, three main sets of requirements must be met simultaneously:
1. Economic activity requirements
The investee must effectively carry out an economic activity. Such activity shall not be deemed to exist
where the main asset consists of securities or real estate not used for business purposes.
Automatic exclusion: So-called ‘asset-holding companies’ —those whose main activity is the holding of
assets— are excluded from the scope of this exemption.

2. Participation and control requirements
The taxpayer must hold at least 5% of the capital individually or 20% jointly with their spouse,
ascendants, descendants or collateral relatives up to the second degree.

In addition, they must exercise effective management functions in the company and receive
remuneration for this representing more than 50% of their total business, professional and employment
income.

3. Valuation Requirements
The exemption applies to the value of the shares proportional to the assets used for economic activity,
i.e. not all of the shareholding is exempt if part of the company’s assets are not linked to the business
activity.

Frequent Cases of Application
-Family businesses: The exemption allows shareholdings in family businesses to be tax-free,
encouraging business continuity between generations.
-Active directors or partners: Those partners who actually participate in the management of the
company, and not as mere passive investors, are the main beneficiaries of this tax advantage.

Incompatibilities and Exclusions
-If the entity is purely patrimonial, the exemption does not apply.
-It also does not apply to holdings in entities which, although formally commercial, do not carry out
a real or relevant economic activity.
-The exemption does not apply automatically: it must be justified each year in the tax return,
proving compliance with the requirements.

Review by the authorities
The Directorate-General for Taxation (DGT) and the courts have issued numerous binding rulings and
judgments interpreting the scope of the requirements. In particular, the management function and the
proportionality of remuneration are examined in detail to prevent abuse or simulation.

In conclusion, the exemption of shares in companies from wealth tax is a key tax tool for promoting
investment in family businesses and protecting the productive fabric. However, its application requires
strict compliance with legal requirements and proper documentation and justification.

In an environment of increasing tax control, it is advisable to carry out adequate wealth planning and,
where appropriate, seek specialised advice to ensure the legitimate application of this exemption.

At MDG Advisors, we remain at your disposal if you are particularly interested in applying the Wealth Tax
exemption discussed in this blog.

Leticia Cayuela Mayor.

In 2025, a new waste collection tax will come into effect that will impact all taxpayers in Spain.
This measure, mandated by Law 7/2022 on waste and contaminated soils, responds to a
European directive requiring that the cost of collecting, transporting, and treating urban waste
be borne by those who generate it. The purpose of this tax is to balance the financing of
municipal services and to encourage more responsible waste management.

The cost of this new tax will not be the same for everyone. It will depend on several factors,
including the cadastral value of the property and the level of waste generation in the
neighborhood where it is located. In general terms, it is estimated that an average household
will pay between €120 and €160 per year, while a commercial premises may pay between
€300 and €400 annually. However, there will be significant differences depending on the area
in which you live.

The calculation of this tax is based 81% on the cadastral value of the property and 19% on the
average amount of waste generated in each neighborhood. This means that more polluting
neighborhoods will pay higher rates, while areas with more sustainable habits will benefit from
a lower charge. The aim is to incentivize more environmentally friendly and equitable
behavior, although the system has also drawn criticism due to its complexity and the unequal
impact it may have on low-income families living in higher-value areas.

If you belong to a vulnerable group, it is important to know that municipalities may apply
discounts. Families with three or more children, recipients of the Minimum Living Income,
individuals with low income, and owners of vacant properties or premises may be eligible for
reductions. Each municipality will define the specific criteria and conditions for granting such
benefits, so it is advisable to consult your local council as soon as possible.

During the second half of 2025, taxpayers will receive an official notification indicating the
amount they are required to pay. The first payment will be made in a single installment that
same year; however, from 2026 onwards, there will be an option to pay in multiple
installments.

In summary, the new waste collection tax will affect everyone to a greater or lesser extent. It is
important to stay well-informed, check with your local council to determine whether you
qualify for any reductions, and prepare for this new expense arriving during the year. While
the financial impact is clear, the measure also presents an opportunity to move toward a more
sustainable and equitable model of communal living.

Teresa Romero Navas

Starting on 1 April 2025, a comprehensive reform of active retirement will
come into force, aimed at improving the compatibility between receiving a
retirement pension and continuing to work.

The most significant changes eliminate contribution requirements (the
requirement to have contributed for more than 36 and a half years to be eligible
for active retirement is abolished, so that it is now sufficient to have contributed
for the minimum legal period of 15 years), extend the percentages of pension
compatible with deferred retirement depending on the number of years of
deferral, and allow deferred retirement incentives to be combined with active
retirement incentives.

This change also pursues a gender-based approach and broader access for
groups with shorter or interrupted contribution histories (helping to reduce the
gender gap in pensions), as well as incentives for self-employed workers who
hire employees. Below is a brief overview of the main aspects.

Aarón Cheung Gallardo.

The Notarial Citizen Portal is an innovative digital tool that will allow both individuals and
companies to carry out various notarial procedures electronically, via video calls. This
eliminates the need to physically go to a notary’s office.

This portal is especially useful for companies and clients, as it simplifies processes such as the
signing of powers of attorney and apostilles, among others, without requiring the physical
presence of the client at the notary’s office. In addition, if the assistance of an interpreter is
required, the system allows video calls to be made to three people simultaneously, without
the interpreter having to be physically present.

Registration and access to the portal

To use the portal, prior registration is essential. Users must create an account by providing
their personal details. The requirements for individuals are to be of legal age and to have a
valid Spanish DNI or NIE.

In the case of legal persons (companies), registration must be carried out through the
corresponding notary’s office, presenting the company’s articles of association, the Deed of
Beneficial Ownership and the identification documents of the legal representative. These
original documents can be sent to the notary by post.

Once the registration is complete, there are three methods of accessing the portal:

1. Personal credentials: DNI/NIE and password.
2. Digital certificate.
3. Cl@ve PIN.

It is recommended to use the digital certificate, as it is the only method that has no limitations
for carrying out any type of procedure within the portal.

Procedures available through the portal

Through this platform, users can carry out various notarial procedures electronically, such as:
 Requesting authorisation for mortgage loans.
 Obtaining simple copies of public deeds.
 Managing the incorporation of companies.
 Processing wills.
 Conducting videoconferences with the notary.
 Managing the legalisation of signatures.

Requirements for video signing a public document

In order to be able to sign a public document electronically by videoconference, certain
technical requirements must be met:

1. A desktop or laptop computer with a webcam and microphone.
2. The digital certificate and the AUTOFIRMA programme must be installed on the device.
3. Before being able to sign a document electronically, the citizen must complete a
signature simulation and validate the digital certificate installed on their computer.
4. If the simulation is successful, the digital certificate will be valid for several months for
use on the portal.
5. The appointment for the videoconference will be scheduled by the notary, who will set
the exact date and time.

At MDG, we invite our clients to take advantage of this platform, as it greatly facilitates the
completion of notarial procedures, reducing waiting times and avoiding unnecessary travel.

Teresa Romero Navas

Electronic invoicing is becoming a reality in Spain and has recently come under the spotlight with the Royal Decree implementing Law 18/2022, Article 12, of 28 September, commonly known as the `Crea y Crece Law´, which aims to promote the creation and growth of companies in order to prevent and avoid tax fraud and which includes a new measure: it will be mandatory to issue an invoice when the recipient of the transaction is a business or professional.

At present, the Spanish Tax Agency has not approved an exact date for the application of this measure; however, this obligation will not be implemented immediately, but a transitional period has been designed to allow entrepreneurs to adapt to this new reality:

– Within 1 year from the approval of the regulation for those entrepreneurs and professionals with a turnover of more than 8 million euros.

– Within 2 years from the approval of the regulation for those professionals and entrepreneurs with a turnover of less than 8 million euros.

The e-invoice is a digital document that has the same legal validity as a paper invoice but, as the name suggests, is issued and received electronically, thus saving costs, streamlining administrative processes and improving transaction security. In an increasingly digital environment, this measure also aims to improve administrative management by increasing the efficiency of invoice management and reducing the use of paper.

This action represents an important step in the modernization of the business system, and to this end the Tax Agency will implement a free application called “Verifactu” for SMEs and the self-employed to send their invoices immediately. This application is a system for issuing verifiable invoices that aims to combat fraudulent practices.

It is advisable to keep an eye on the next updates from the government and the Tax Agency for more precise information on implementation deadlines and new developments.

Carmen Moya López

MDG Advisors