Previous issue: rules for the valuation of assets acquired, located or deposited abroad

Before entering into a discussion of each of the legally established valuation criteria, it is advisable to point out, as a preliminary matter, the rules that must be used to proceed with the valuation of assets acquired, located or deposited abroad.

In the case of assets acquired, located or deposited abroad, in order to express their valuation in euros for the purposes of the Wealth Tax, the following specific rules must be taken into account, where applicable:

1. Assets whose valuation rules are based on acquisition value.

In the case of assets whose price, consideration or acquisition value is originally expressed in a currency other than the euro and one of these amounts must be computed for the purposes of this tax, the equivalent value in euros must be determined:

1. In the case of currencies other than those of the Member States of the European Union that have adopted the euro, based on the official euro exchange rate corresponding to the date of accrual of the tax published by the European Central Bank or, failing that, the last official exchange rate published previously. 

   See the Resolution of December 28, 2023, of the Bank of Spain, which publishes the exchange rates of the euro corresponding to December 28, 2023, published by the European Central Bank, which will be considered official rates, in accordance with the provisions of article 36 of Law 46/1998, of December 17, on the Introduction of the Euro ( BOE 12-29-2023). 

   If there is no official exchange rate, the market value of the monetary unit in question will be taken as a reference.

2. In the case of currencies of the Member States of the European Union which have adopted the euro, according to the conversion rates irrevocably fixed between the euro and the currency in question contained in Council Regulation ( EC ) No 2866/98 of 31 December 1998 ( OJEC of 31/12/98), taking into account for conversion and rounding the rules laid down in Council Regulation ( EC ) No 1103/97 of 17 June on certain provisions relating to the introduction of the euro.

2. Valuation of real estate located abroad.

In the case of real estate located abroad, the equivalent in euros of the price, consideration or acquisition value, determined in accordance with the provisions of rule 1 above, must be declared for this tax.

3. Deposits into accounts in currencies other than the euro.

Deposits in current or savings accounts, whether demand or term, will be computed by the balance they show on the date of accrual of the tax, unless the former is lower than the average balance corresponding to the last quarter of the year, in which case the latter will be applied.

For these purposes, the average balance shall be calculated in the currency in question, in accordance with the provisions of Article 12 of the Wealth Tax Law, and its equivalent in euros shall then be determined in accordance with rule 1.

Regarding article 12 of the Wealth Tax Law, see the section on " Deposits in current or savings accounts, demand or term, financial accounts and other types of deposits in account " within the section "Formation of gross assets: "rules for the valuation of assets and rights" of this same Chapter.

4. Securities traded on organised markets located abroad.

There is no definition of “organized market” in either Spanish tax regulations or financial regulations relating to negotiable securities.

However, in the financial field, markets in which there is a set of rules and regulations that determine their operation are usually known as “organized markets.”

From this perspective, the concept of “organized market” is broader than that of “official secondary market” or “regulated market” referred to in article 42, section 2 a) of Law 6/2023, of March 17, on Securities Markets and Investment Services, ( BOE of March 18), since, when it comes to shares or participations in entities, it also includes the so-called “multilateral trading systems”, as markets endowed with self-regulation that establishes their structure and operating system.

Regarding multilateral trading systems, their definition must be sought in the new Securities Market and Investment Services Law, Law 6/2023 of March 17, in its article 42.2 letter b), which provides:

“b) «multilateral negotiating system» (MNT): multilateral system, operated by an investment services firm or a market operator, which allows for the pooling—within the system and according to non-discretionary rules—of the various buying and selling interests in financial instruments of multiple third parties to give rise to contracts, in accordance with this Title.”

In accordance with the above, it can be stated that the concept of "organized markets" referred to in Article 15 of Law 19/1991 is broader than that of the official secondary market or regulated market and includes the so-called "multilateral trading systems."

This is also evident from the inclusion in the Order that annually approves the list of traded securities with their average trading value corresponding to the fourth quarter, pursuant to the provisions of articles 13 and 15 of the Wealth Tax Law, of both shares that are traded on the Spanish stock exchange and shares that are traded on the Alternative Stock Market (Spanish multilateral trading system). The explanatory memorandum of these orders establishes an equivalence between “organized markets” and “trading centers.”

For its part, Article 42 of the aforementioned Law 6/2023 defines trading venues as “multilateral systems authorized to operate by the National Securities Market Commission (CNMV) and by the Autonomous Communities with powers in matters of securities markets, understood as any system or device in which the various interests of purchase and sale of financial instruments of multiple third parties interact, whose operation must be governed by the provisions of this law and its implementing regulations.” And for the purposes of the same, it distinguishes between: regulated markets, multilateral trading systems and organised trading systems.

Based on the above, the concept of “organized markets” (current trading centers) is broader than that of official secondary market or regulated market (stock exchanges) and includes multilateral trading systems where securities are traded, and for these purposes the regulations applicable in the foreign location where the securities representing the participation in equity are located must be taken into account.

5. Securities representing participation in the equity of foreign entities, not traded on organised markets.

In the case of shares and interests in the share capital or equity of any type of foreign entity, not traded on Spanish organised markets, in order to determine the value resulting from capitalising at a rate of 20% the average of the profits of the three financial years closed prior to the tax accrual date, the average of said profits will be calculated in the corresponding currency, then determining its equivalent in euros in accordance with the provisions of rule 1.