tax obligations and wealth tax

4POSTS

last year

Hi there

Ive just moved to Spain with a NL Visa. I was wondering about paying tax here and if we have a choice which country we pay tax in. I will still pay tax in my own home country for some passive income earned there so presumably Spain wont be taxing me as well - wouldnt be right to pay tax twice on the same income.

And then Ive been reading about Spain having a wealth tax in the Costa Brava. We dont have this in my home country. does anyone know how this works and what the value/threshold of assets is that you must have to be eligible to pay the wealth tax? And is that also calculated o assets owned between January - December ?

thanks

Margaret

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gwynj Bulgaria Expert

2615POSTS

last year

@mbatchelar

Yes, tax is an issue, and if you're extremely wealthy, it might be a bigger concern than for an Average Joe. Typically, you have a lot more immediate things to worry about (place to live, Padron registration, residence card, health insurance, etc.) than income taxes. And I doubt it's an urgent issue you need to stress over.

Typically, most folks leave their previous country (e.g. New Zealand) and immediately/soon lose their tax residence there. Spain has multiple conditions for tax residence, the most common is 183 days (i.e. more than half the year). As you just entered Spain, you are not yet a Spanish tax resident... but if you live here, you will become one in approximately 6 months.

If you don't want to acquire Spanish tax residence, then you have to limit your stays to less than 183 days per year (and return to New Zealand, or another country for the rest of the year). There are definitely some NLVs that do this.

If you're living/retiring in Spain, then you will become a Spanish tax resident. I don't know the New Zealand tax rules, so perhaps you can't lose your NZ tax residence status because of either your passport (like USA) or your ownership of NZ real estate (like UK used to do). In which case, you'd have dual tax residence. Or perhaps (more common) you lose your NZ tax residence... but continue to file non-resident tax returns (for passive income generated by NZ-based assets).

In any case, it doesn't matter much. If you're a Spanish tax resident, you should file a tax return. And I'd guess there's a DTA (Double Taxation Agreement) between Spain and NZ, so normally you don't pay tax twice on the same income. (But you might pay a bit more if the Spanish rate on passive income is higher than the NZ rate.)

I'm not an expert on the wealth tax, but pretty sure it's based on your total assets at the time of the submission (or at the end of the year). And I think it's a lot of money (close to a million euros). For most of us, it's a non-issue, but if you're buying a 2 million euros villa on the beach on the outskirts of Barcelona it might be a concern.

Tax Residence

https://taxsummaries.pwc.com/spain/individual/residence

Wealth Tax

https://www.pellicerheredia.com/en/wealth-tax-spain/