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2021 Wealth Tax practical guide.

Example

Mr. J.B.A., a bachelor and resident in Toledo, presents the following tax details corresponding to his Personal Income Tax and Wealth Tax (IP) tax returns in 2021.

  • General tax base for Personal Income Tax: 50,000
  • General net tax base for Personal Income Tax: 48,000
  • Personal and family tax-free threshold: 5,550
  • Taxable and tax base for Personal Income Tax savings: 2,000
  • Total national and regional income tax payment: 12,407
  • Total tax saving:  380
  • Tax base for Wealth Tax (IP): 8,000,000
  • Total share of Wealth Tax: 112,354.37

Determine the amount to be paid for the Wealth Tax corresponding to the 2021 financial year, knowing that the part of the taxable base of the resulting savings capital gains and losses corresponding to the positive balance of those obtained by transfers of capital assets acquired more than one year before the transfer date amounts to 1,000 euros, and that the net value of assets declared that cannot be generated in Personal Income Tax amounts to 250,000 euros

Solution:

  • Share of Wealth Tax corresponding to unproductive assets: (250,000 x 112,354.37) ÷ 8,000,000 = 3,511.07

  • Share of Wealth Tax subject to limitation (112,354.37-3,511.07) = 108,843.30

  • Total state and autonomous community income tax payment: 12,407

  • Full State and Autonomous Community payment of Personal Income Tax savings for the purposes of the limit (1): 190

    • Sum of full Personal Income Tax payments (12,407 + 190) = 12,597

    • Sum of full Personal Income Tax and IP payments (12,597 + 108,843.30) = 121,440.30

  • Limit of full Personal Income Tax and IP payments (60% over 51,000) = 30,600

    • General tax base for Personal Income Tax: 50,000

    • Personal Income Tax savings tax base: 1,000 (2)

  • Theoretical reduction to be made in the total share of Wealth Tax (121,440.30-30,600.00) = 90,840.30

  • Maximum limit for reduction of the total share capital: (80% Over 112,354.37) = 89,883.50

  • Wealth Tax payment (112,354.37-89,883.50)  (3) = 22,470.87

Sample notes:

(1) For the purposes of determining the total amount of the Personal Income Tax savings, the portion corresponding to the positive balance of the capital gains and losses obtained by the transfer of capital assets acquired more than one year before the date of transfer was made was taken into account. That is, (380 ÷ 2,000) x 1,000 = 190 euros.(Back)

(2) For the purposes of determining the taxable income base for the savings of Personal Income Tax, the portion corresponding to the positive balance of the capital gains and losses obtained by the transfer of capital assets acquired more than one year before the date of transfer was made was taken into account. That is, (1,000 ÷ 2,000) x 2,000 = 1,000 euros.(Back)

(3) The amount payable for Wealth Tax coincides with the amount of the minimum payment (20% over 112,354.37 = 22,470.87 euros). By applying this minimum payment, there is an unreduced excess of 956.80 euros, which is the difference between the theoretical reduction (90,840.30) and the maximum reduction limit (89,883.50).(Back)