How the Wealth Solidarity Tax in Spain Affects Property Owners

In recent years, wealth taxation has gained increasing relevance among international investors looking to acquire property in Spain. One of the most discussed—and often misunderstood—topics is the so-called wealth solidarity tax in Spain, a levy targeting high-net-worth individuals that can significantly impact those owning high-value assets, such as villas in Marbella or apartments on the Costa del Sol.

But what does this tax really mean? Who is required to pay it? And how can its impact be legally optimized? In this article, we answer these questions clearly, with updated data and practical advice to help you make informed decisions.

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What is the solidarity tax in Spain?

The Temporary Solidarity Tax on Large Fortunes (ISGF) is a levy introduced by the Spanish government in 2022, initially intended for the fiscal years 2022 and 2023. However, its application has been extended, and all indications suggest it will remain in force at least through 2025.

This tax complements the Wealth Tax, and its purpose, according to the government, is to increase the fiscal contribution of high-net-worth individuals in a context of economic stress. You can consult the original legal text on the official website of the Spanish Tax Agency.

The ISGF applies to individuals—both residents and non-residents—who own assets and rights in Spanish territory exceeding a certain economic threshold.

Who is affected by the wealth solidarity tax in Spain?

The tax is designed to apply to net worth (assets minus liabilities) exceeding €3,000,000. The taxable base and final amount depend on whether the taxpayer is fiscally resident in Spain or not:

• Tax residents may deduct an exemption of up to €700,000 plus an additional allowance of €300,000 for their primary residence.

• Non-residents are not entitled to this general exemption but are only taxed on assets located in Spain.

This means that a foreign citizen who owns a property in Marbella valued at, for example, €5 million, could be subject to the solidarity tax if their ownership structure has not been fiscally optimized.

What assets are included in the wealth solidarity tax in Spain base?

This tax considers a wide range of assets: financial investments, company shares, works of art, and of course, real estate. Properties located in Spain—such as luxury villas or beachfront apartments—are included in the calculation of the taxpayer’s net worth.

The value used to calculate the tax is the highest of the following three:

1. The cadastral value.

2. The value assessed by the administration for other tax purposes.

3. The purchase price.

The latter is especially relevant for international investors since the actual purchase price is often the value used if it exceeds the cadastral value.

How can the impact of the solidarity tax in Spain be legally reduced?

Fortunately, there are legal ways to optimize the tax burden associated with this levy. The most common—and fully accepted by the Spanish Tax Authority—are the following:

1. Registering a mortgage on the property

Placing a registered mortgage on the property allows you to deduct the mortgage amount as debt in the net worth calculation. For example, if you buy a property for €4 million with a mortgage of €1.5 million, the net value for tax purposes would be only €2.5 million, potentially below the ISGF threshold.

It’s essential that the mortgage be a real financial operation—with a deed, a bank, and payment terms. This strategy is often used by international buyers who seek partial financing even if they can pay in full, specifically for its favorable tax impact.

2. Splitting property ownership between multiple individuals

Another effective strategy is to purchase the property jointly between two or more people, such as spouses or business partners. For instance, a €5 million villa purchased equally by a couple would distribute the asset’s value between them. Each would then report only €2.5 million, which could be exempt from the tax or within minimum thresholds, depending on their fiscal profile.

This approach is easy to implement and does not entail significant additional costs, although it does require prior planning and sound legal advice to avoid future disputes over ownership.

What if I own the property through a foreign company?

Many international investors choose to use offshore corporate structures to purchase property in Spain. However, this model has lost effectiveness due to recent European and national regulations aimed at preventing tax avoidance.

Today, the Spanish Tax Agency can attribute the asset’s value to the ultimate beneficial owner, especially if the company has no real activity and its sole purpose is to hold the property.

Therefore, this strategy should be approached with caution and only used under specialized legal supervision.

Why is early planning important?

One of the keys to avoiding unexpected tax burdens in Spain is early planning. Many buyers only learn about these taxes after purchasing a property, which complicates any optimization efforts.

Planning with a tax lawyer from the start not only helps reduce or avoid the wealth solidarity tax in Spain, but also allows you to design a secure, transparent, and flexible ownership structure suited to your long-term financial and personal situation.

This is particularly relevant if you plan to spend extended periods in Marbella, obtain tax residency in Spain, or leave the property as part of your family legacy.

How FM Properties can help you

At FM Properties, we understand that buying property in Spain goes far beyond choosing a villa with sea views. It means understanding the legal and tax framework, anticipating scenarios, and making well-informed decisions from the outset.

That’s why we work closely with lawyers specialized in international taxation and offer comprehensive support throughout the entire purchase process. We help you structure your investment legally, safely, and efficiently.

And if you already own property and are concerned about this tax, we can connect you with our legal partners to review your ownership structure and explore viable solutions.

Conclusion

The wealth solidarity tax in Spain is a reality that all high-value property buyers must consider. While it may feel like an unexpected burden, the truth is there are legal and effective ways to reduce its impact.

The key is to act early, seek professional advice, and structure ownership intelligently from the beginning. This way, you can enjoy your investment in Marbella with the peace of mind that comes from making the best possible decision.

At FM Properties, we’ve been guiding our clients through these processes for over 30 years, with a close, professional, and long-term approach.

Frequently Asked Questions (FAQ)

1. What exactly is the wealth solidarity tax in Spain?
It’s a state-level tax applied to net assets exceeding €3 million, including properties located in Spain.

2. Does this tax apply to non-residents?
Yes, if they own Spanish assets whose value exceeds the established threshold.

3. Can registering a mortgage actually reduce the tax?
Yes, as long as the mortgage is real and registered, the amount is deducted from your net wealth.

4. What happens if the property is owned by a company?
It depends, but the tax authority may attribute the value to the beneficial owner if the company is merely instrumental.

5. Is it legal to split ownership between two people to reduce the tax?
Yes, it’s a common and legal practice when structured properly.