Wealth Tax and Solidarity Tax in Spain: What Foreigners with Assets Should Expect

If you have moved to Spain, invest here or own a home on the coast, sooner or later you will hear about the “wealth tax”. In Spain there are actually two separate taxes on wealth, and mixing them up is one of the most common mistakes foreigners make. This guide explains how they work from scratch and what is worth reviewing in 2026.

The Wealth Tax: a national tax administered by the regions

The Wealth Tax is charged on what you own on 31 December each year, not on what you earn: property, bank accounts, investments, life insurance with a surrender value, vehicles, works of art and other assets, minus the debts that finance them. It is a national law, but the autonomous communities (Spain’s regions) can change the tax-free allowance, the rate scale and the reliefs. That is why the outcome varies so much depending on where you live.

The national rules, which apply when a region has not legislated its own, provide a tax-free allowance of €700,000 per person, plus an exemption of up to €300,000 for your main home. A progressive scale applies to everything above that, running from 0.2% to 3.5%. There is also a protective cap: the combined total of this tax and personal income tax (IRPF) cannot exceed 60% of your income, although a minimum amount is payable in any case.

Another key factor is what you have to declare. If you are a tax resident (generally, if you spend more than 183 days a year in Spain or your centre of economic interests is here), you are taxed on your worldwide wealth. If you are a non-resident, you are taxed only on assets located in Spain or rights that can be exercised here. Those who opt into the special regime for relocated workers (popularly known as the “Beckham law”) are also taxed only on their Spanish assets rather than their worldwide wealth.

Madrid versus the rest: why the map matters

Each region sets its own rules, and the differences are large:

• Madrid applies a 100% relief on the tax due, so in practice you pay nothing, although the return must still be filed where required. Andalusia applies a similar relief.
• Other regions, such as Catalonia, have lower tax-free allowances than the national one and steeper scales, so a level of wealth that would not be taxed in Madrid may well be taxed there.
• Some regions add their own deductions or exemptions, and these conditions change fairly often.

Before deciding where to live or where to buy, check the current rules for the specific region on its regional tax authority’s website or with an adviser. Don’t assume that what applied last year still applies today.

Non-residents have their own allocation rule: residents of the EU or the European Economic Area can apply the rules of the region where the greatest value of their Spanish assets is located. Those from outside the EU apply the national rules.

The Solidarity Tax on Large Fortunes: the Madrid trap

Since it was introduced in late 2022, the Temporary Solidarity Tax on Large Fortunes has applied to net wealth above €3 million, with rates rising from 1.7% to 3.5% in the higher brackets. Although it was created as a temporary measure, it has been extended and now behaves like a permanent tax. It is a national tax: no region can grant relief on it.

What you can do is deduct from it what you have paid in Wealth Tax. Here is the trap: if you live in Madrid and your wealth exceeds the threshold, the 100% relief means you have paid nothing in the regional tax, so there is nothing to deduct and the Solidarity Tax is payable almost in full. For large fortunes, “living in Madrid” does not mean “paying nothing”.

Both taxes are filed every year, normally during the same period as the income tax return, using different forms (Form 714 for the Wealth Tax and Form 718 for the Solidarity Tax) with the AEAT, Spain’s national tax agency. If you don’t yet have an NIE (foreigner identification number, the tax ID you need for almost any procedure), you must obtain one before you can file them.

What to do if you have assets in Spain

Put your assets in order with their value on 31 December, check which ones may be exempt (main home, certain holdings in family businesses) and confirm your tax residence before filing. If your accounts or investments are abroad, also remember the informative declaration of assets held overseas (Form 720), which is separate from paying tax but has its own obligations.

At Zythos Business we support freelancers and small businesses, including many foreign entrepreneurs, so that the visible side of their taxes (VAT, withholdings, corporate tax) and the wealth side fit together. If you have a company or business in Spain, its value is also part of your wealth, and reviewing it in advance avoids surprises when the filing calendar arrives.