We understand the need to pay tax. It gives us hospitals to treat our family, care in later life and many other services. Yet it is also easy to feel unhappy about some taxes. Some seem just downright unfair.
Wealth tax is the first of these. Having worked hard and paid tax on our earnings, we have then also paid tax on our savings. Despite this we have managed to build our savings, have become less of a burden on the state and yet we are now taxed again with Wealth Tax for having saved. Fortunately, it is possible to pay what is due but also to manage the amount due.
Wealth Tax in Catalunya - How it works
Wealth tax ( Patrimonial ) is applied if your worldwide assets are more than 500,000€ with an additional allowance of up to 300,000€ for your main residence. The tax is based upon your net wealth; assets minus liabilities.
In Catalunya the rates of tax start at 0.21% and rises to 2.75% depending on your wealth. Each year!
Your wealth as at 31st December is declared as part of your Declaración de la Renta, your annual tax return and the payment of the tax made on the 30th June in the following year.
How to manage the amount due
There are some assets that are excluded from Wealth tax. Surprisingly, some of these are mainstream investments. It may be possible to reduce your Wealth Tax by using an exempt investment.
In addition, the amount of tax due is capped at 60% of your income tax base, subject to paying at least 20% of the total tax based on your wealth. It is often possible to adjust your income so that you are limited to the 60% of your income tax base. Typically, this is done by using investments which are not assessed for tax each year. However, there are several methods of planning to achieve a reduction in Wealth Tax.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.