Spanish ‘Wealth Tax‘ has been abolished with effect from 1 January 2008. (Impuesto Extraordinario sobre el Patrimonio)
As this tax was levied based on assets held on 31 December of a given year, the tax for 2007 will therefore be payable as usual during 2008. However no wealth tax will be payablle for 2008 itself during 2009.
The tax treatment for residents and non-residents is different. Residents pay this tax on their worldwide assets, less various exemptions. Non-residents pay the tax only on assets held in Spain, but there are no exemptions.
Undoubtedly the move, announced after the re-election of the Spanish PSOE government, is designed to mitigate the damage to the Spanish housing market and construction industry in the wake of the current economic downturn; it may also encourage some people to re-locate to Spain if 18 per cent income tax is the only tax they will have to pay.
Whilst because of the allowances available this affected non residents more than residents it is none the less a welcome move.
This also means that non resident owners who did not like to sort out their own wealth tax may no longer need to retain the services of a fiscal representative; however, you do need to check out your agreement with your representative and give them notice as soon as possible.