Example

Ms. VGC, resident in Ávila, presents the following data in her Wealth Tax return corresponding to the 2019 financial year:

Taxable base: 1,450,000
Liquidable base: 750,000
Full fee: 3,240.36

In his declaration he has included a property located abroad of which he is the owner and whose acquisition price was 200,000 euros. Of the aforementioned amount, 40,000 euros are pending payment as of 12-31-2019. Due to a personal lien that affects the aforementioned property, 350 euros corresponding to the 2019 financial year have been paid abroad.

In the section corresponding to deductible debts of your Wealth Tax return only
includes the 40,000 euros corresponding to the property.

Determine the amount of the deduction corresponding to tax paid abroad.

Solution

Tax actually paid abroad due to the property: 350
Amount that would have to be paid in Spain due to the property:
- Part of taxable base taxed in the foreign ⁽¹⁾: 82,758.62
- Average effective rate of tax: 0.43 per 100 ⁽²⁾
- Part of taxable base taxed abroad x average effective tax rate (82,758.62 x 0.43%): 355.86
Deduction amount (the lesser of 355.86 and 350): 350

Notes to the example:

⁽¹⁾The part of the taxable base taxed abroad is determined by subtracting from the acquisition value of the property the amount of the debts corresponding to it, which are the only debts that appear in the corresponding section of the declaration: 200,000 – 40,000 = 160,000 euros. Once the net value of the property has been determined, it is reduced by the proportional part of the reduction due to the exempt minimum: (160,000 x 750,000) ÷ 1,450,000 = 82,758.62 euros. ^(Back)

⁽²⁾The average effective tax rate is determined as follows: (3,240.36 x 100) ÷ 750,000 = 0.43. ^(Back)