Law 38/2022, of December 27, 2002, brought important regulatory changes affecting the taxation of non-resident companies in Spain.
The first aspect to highlight would be the implementation, already for the financial year 2022, of the Temporary Solidarity Tax on Large Estates, hereinafter referred to as ITSGF.
This new tax, with which we should familiarise ourselves, is a direct, personal and complementary tax to the Wealth Tax, which is levied on the net wealth of individuals with a value of more than Euros 3,000,000.
So far, both resident and non-resident taxpayers in Spain will have a new tax obligation with the Spanish tax authorities in July.
But what happens with the Euros 700,000 exemption established in this tax? Well, this is where the possible “discrimination against non-residents in Spain” who have invested or intend to invest in our country comes into play, as the tax base will only be reduced by Euros 700,000 in the case of personal obligation. In other words, this reduction of Euros 700,000 CANNOT be applied to non-resident taxpayers in Spain, which could be a discrimination contrary to Community provisions.
However, what happens with the taxation limit for this tax? The full amount of this tax, together with the amounts of Personal Income Tax and Wealth Tax, may not exceed, for taxpayers subject to the tax by personal liability, 60% of the sum of the taxable bases of the former. Again, another limit, but only for the personal liability: what happens to those who are taxed under the real liability (non-residents in Spain)?
And, finally, we will deal with the criterion of personal and real obligation, a subject that serves as a prelude to comment on another regulatory change brought about by Law 38/20222, of 27 December. In the third final provision of the aforementioned Law, the Wealth Tax is modified, also for the financial year 2022.
With this amendment, who are the taxable persons for wealth tax from 2022 onwards, and therefore for the ITSGF?
- By personal obligation, individuals who have their habitual residence in Spanish territory, with the tax being levied on the totality of their net wealth regardless of where the assets are located or where the rights can be exercised.
- By real obligation, any other natural person for the assets and rights they own when these are located, may be exercised, or must be fulfilled in Spanish territory.
MODIFICATION: For these purposes, securities representing equity interests in any type of entity, not traded on organised markets, at least 50% of the assets of which are directly or indirectly made up of real estate located in Spanish territory, shall be deemed to be located in Spanish territory.
In the recent resolution of the DGT consultation V0107-23, dated 1 February 2023, it was established that, with the new regulatory change, a non-resident in Germany, partner of a German company, holding a real estate property in Ibiza valued at 7,500,000 Euros, whose value means that at least 50% of the company’s assets are made up of real estate located in Spanish territory, will be taxed in Spain for all of the company’s assets, AND NOT only for the real estate in Spain.
This conceptual modification to the real tax obligation leads us to consider this “new concept” of real obligation as a hybrid between being a taxpayer by personal and real obligation, since, if the non-resident company has assets, at least 50% of which are made up, directly or indirectly, of real estate located in Spanish territory, it will have to pay tax in Spain on all the company’s assets, even if it is a non-resident company.
Due to the importance of foreign capital in our country, both the ITSGF and the new modification of the Wealth Tax have already been denounced before the European Commission. There is nothing left to do but wait for the resolution of this complaint, and in the meantime, we will be happy to analyse each specific case of our clients.