Example

Mrs. VGC, resident in Ávila, presents the following data in her Wealth Tax return for the year 2019:

Taxable base: 1,450,000
Taxable base: 750,000
Full share: 3,240.36

His declaration included a property located abroad that he owns and whose purchase price was 200,000 euros. Of the aforementioned amount, 40,000 euros are pending payment as of 31-12-2019. Due to a personal lien affecting the aforementioned property, 350 euros have been paid abroad for the 2019 financial year.

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

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

Solution

Tax actually paid abroad for the property: 350
Amount that would have to be paid in Spain for the property:
- of taxable base taxed abroad⁽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 portion of the taxable base taxed abroad is determined by subtracting the amount of the debts corresponding to the property from the acquisition value of the property, 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 for 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)