Wealth Tax in Spain: modelo 714

Modelo 714 is the Wealth Tax declaration, which assesses the net assets of natural persons residing in Spain. It considers both rights and assets owned by the taxpayer. We must especially consider the economic parameters that determine whether or not its presentation is mandatory. Its application is national, although the performance is transferred to the Autonomous Communities.

When do you have to submit the Wealth Tax declaration?

Modelo 714 must be submitted between April 7 and June 30, only online. Not all individuals are obligated to file this form; it depends on specific criteria. As with the income tax return, Modelo 100, its presentation is linked to the fact that the assets and rights exceed a certain value, as we will see below.

Who must file the Form 714 declaration?

Individuals and entities meeting the following requirements must submit the Wealth Tax or Modelo 714:

• Asset Value:If the value of your assets and rights exceeds €2,000,000 (without considering personal obligations or encumbrances).
• Deductions and Bonuses:After accounting for deductions or bonuses, the tax amount for Form 714 is calculated.
• Exempt Minimum:Even if the value of rights and assets doesn’t exceed €2,000,000, the declaration is required if the net assets (tax base) exceed the exempt minimum.
  • The general exempt minimum is €700,000 (excluding habitual housing up to €300,000).
  • However, this threshold varies across autonomous communities:
    • Valencian Community: €600,000
    • Catalonia: €500,000

Exclusion from Tax Base Calculation:

Modelo 714 excludes certain items when calculating the tax base for the calculation of the tax base:

• Investments like pension plans or group insurance.
• Primary residence, as long as its value does not exceed €300,000.
• However, it does include works of art, antiques, and business assets

Finally, the amount to be paid depends on each Autonomous Community: Madrid, Andalusia and Extremadura have a general bonus of 100% and Galicia of 50% for 2023. Cantabria and the Region of Murcia have announced that they want to give a 100% bonus although, it hasn’t been confirmed yet.

Remember that the specifics may differ based on your location within Spain. If you have further questions or need additional details, feel free to ask!.

How is Form 714 filled out?

The Wealth Tax declaration document is made up of 10 parts, to which the income is added.

• Section 1: General information. The first section must include data relating to the Autonomous Community and identification of the declarant.
• Sections 2-8: Assets, rights and debts. Sections 2 to 8 indicate which elements are part of the assets to be declared, such as current accounts, capital…
  or Summary. Once the outlined parts have been completed, the summary of the net assets is made, on which the tax base of model 714 is established.
• Finally, the data related to the payment document is marked.

How is the 2023 Wealth Tax calculated?

To calculate the Wealth Tax fee, we must consider that it accrues at the end of each fiscal year, so we would take into account the state of our assets as of December 31, 2023.

We must complete form 714 considering the same calendar as for submitting the Income Tax return, with a deadline of June 30.

There are many type of assets that must be declare: shares or participations in your own funds, life insurance, temporary or life annuities, real estate, bank deposits, jewelry and other valuable assets, art and antiques, certain vehicles. , boats, etc. In the case of having cryptocurrencies, foreign operations must be declared through Form 721.

Furthermore, it is important to consider the valuation rules set out in the Wealth Tax Law for those cases in which it is not easy to identify the value of our assets or our liabilities, as is the case with real estate.

Also keep in mind that the management of this tax is assigned to the autonomous communities, which means, in practice, that it is not applied in some of them or that different exempt minimums, exemptions, deductions and bonuses may be applied depending on the preferences of each autonomous government. Also, the applicable rates may vary from one community to another.

It is precisely this lack of unification that has led to the creation of the Solidarity Tax, which directly attacks the highest incomes to avoid regional exemptions.

2. The Solidarity Tax on Large Fortunes. Modelo 718

The Solidarity Tax on Large Fortunes, nicknamed the new ‘tax on the rich’, is a tax of a temporary nature (It only applies to 2022 and 2023) that is regulated and managed at the state level, designed to combat the total or partial exemptions existing in different autonomous communities for the Wealth Tax, as is the case of the Community of Madrid or Andalusia.

To avoid possible double taxation, the Wealth Tax fee paid at the regional level may be deducted from the Solidarity Tax fee. Only if the Wealth Tax fee is zero or is lower than that of the Solidarity Tax to Large Fortunes, you will have to pay the difference.

Specifically, this new tax will affect large assets in Andalusia, the Community of Madrid, Galicia, Catalonia, the Region of Murcia, Asturias, Cantabria and the Balearic Islands.

Who pays the Solidarity Tax of Large Fortunes

The taxpayer of this tax is natural persons residing in Spain with a net worth of more than 3,000,000 euros on December 31, 2023. Given that there is an exempt minimum of 700,000 euros, the tax will only begin to affect from 3,700,000 euros of net worth.

When is the Large Fortunes Tax applied?

The deadline for submitting the Tax on Large Fortunes is between July 1 and 31, 2023, through Modelo 718. This form will be available exclusively in electronic format and its presentation and payment will be done electronically, in general, using the help forms available on the Treasury website.

How the new Tax on Large Fortunes works.

The solidarity tax on large fortunes has a progressive rate that works as follows:

• 7% between 3 and 5.3 million euros.
• 1% between 5.3 and 10.6 million euros.
• 5% above 10.6 million euros.

As for the tax base of the Solidarity tax, it is made up of the net worth, which consists of the difference between assets and rights, on the one hand, and debts and obligations of the taxpayer, on the other. The rules for valuation and determination of the tax base are the same as in the Wealth Tax.

The same exemptions may also apply as in the case of the Wealth Tax. It should be remembered that there is an exempt minimum of 700,000 euros.

After applying these rules and exemptions, taxable persons whose tax amount, determined in accordance with the tax regulations and once the appropriate deductions or bonuses have been applied, will be required to file a declaration.

If you have any further questions, please do not hesitate to contact us: +91 519 4392 or by email info@ustaxconsultants.es