On 12 January 2024, the Spanish State Journal published the validation of Royal Legislative Decree 8 of 27 December 2023, which adopted measures to deal with the economic and social consequences of the conflicts in Ukraine and the Middle East, and to mitigate the effects of the drought.
In this regard, in matters relating to tax, Royal Legislative Decree 8/2023 extended the Temporary Solidarity Tax on Large Fortunes (Impuesto Temporal de Solidaridad de las Grandes Fortunas, “ITSGF”) through 2024, in accordance with the Fifth Additional Provision of the said Decree. The minimum exempt threshold of 700,000 euros was also extended to all taxpayers, regardless of whether or not they are tax resident in Spain.
It is important to bear in mind that the Decree’s Fifth Additional Provision establishes that the ITSGF is extended for the 2024 financial year so long as the taxation of wealth is not reviewed in the context of the reform of the autonomous community financing system, so it is important to remain alert to any potential regulatory changes in this regard.
In addition, as was widely reported in the press in mid-December 2023, the Community of Madrid took the lead in this regard and re-established the Wealth Tax for the 2023 financial year while the Temporary Solidarity Tax on Large Fortunes remains in force. In this regard, the Community of Madrid established a rebate under the re-established Wealth Tax, taking account of the combined technical limits of the Wealth Tax, Personal Income Tax and the total ITSGF amount payable.
According to official estimates, the impact of the repeal of the 100% autonomous community rebate, combined with approval of the new rate, will affect around 10,300 taxpayers in Madrid and bring in revenues of approximately 555 million euros per year.