The so-called tax on the rich or solidarity tax on large fortunes goes ahead. As we know, the Government is going to approve the well-known Temporary Solidarity Tax on the Great Fortunes. Also more colloquially known as “tax on the rich”. It is a measure surrounded by great controversy and controversy. It has also generated a lot of uncertainty among taxpayers. In addition, we have recently learned that its entry into force will be brought forward by one year.
But then, what does the ITSGF consist of? Who is affected by the ITSGF? How much will the ITSGF cost me? Arrabe Integra introduces you to the subject. By means of a few brief outlines, we will tell you what we consider to be the most interesting points.
Tax on the rich or solidarity tax on large fortunes
Let us list the main characteristics.
- Entry into force. It is foreseen that its first year of application will be 2022.
- Scope of application. It will be applied throughout the Spanish territory.
- Accrual. The date of accrual of the tax is set at December 31 of each year.
- Valuation. Same valuation rules as the Wealth Tax.
- Same exemptions as the Wealth Tax.
- Specific exemption of the family business.
- Exemption of €300,000 for habitual residence.
- Exemption of €700,000 for personal minimum.
- Taxpayers. Taxpayers with assets exceeding 3 million euros, after deducting the exemptions, will be taxpayers.
- Tax rate:
- From 3 to 5 million euros: 1.7%.
- From 5 to 10 million euros: 2.1%.
- Finally, up to 10 million euros: 3.5%.
- Taxable Base. The excess over 3 million euros is taxed (after deducting exemptions).
- Deductions. The Wealth Tax previously paid will be deducted from the tax liability.
- Tax shield. The well-known “tax shield” (joint IRPF-ITSGF limit) is applied in identical terms to the Wealth Tax.
Valuation rules for assets and liabilities
Some examples are described below:
- Bank accounts. Higher value between:
- Balance at December 31.
- Average daily balance of the last quarter of the year.
- Real estate. Greater value between:
- Cadastral Value.
- Acquisition Value.
- Value determined by the Administration.
- Shares in unlisted and unaudited companies. Greater value between:
- Nominal value.
- Theoretical value obtained from the last approved balance sheet.
- Capitalization at 20% of the average of the profits corresponding to the 3 fiscal years prior to the date of accrual.
- Vehicles. Reference value according to tax tables at the date of accrual of the tax.
Controversy of this new tax
The Treasury expects to collect around 1,500 million euros with this tax. But the controversy comes from the side of whether it will be an impediment for foreign investors to come to Spain. If in the end it will provoke a flight of the majority of the great fortunes, and countries like Portugal, so close and with a series of very interesting fiscal benefits, will benefit from it.
There is also discussion if it is a tax created to annul the fiscal benefits of some Autonomous Communities, especially Madrid and Andalusia, where the Wealth Tax is subsidized. This same discussion will possibly be clarified in the Constitutional Court, if, as they warn, it invades autonomic competences.
Finally, there is also talk of the fairness of a tax, which for many means a second levy on the same thing. And for others it can be a big problem because, being a fixed rate on the value, it is not related to the taxpayer’s ability to pay. It can be the case of a high patrimony due to inheritance or better times in the past, but with little current income.