Overview of the Temporary Solidarity Tax on Great Wealth
The Ministry of Finance projects a total collection of about 1,500 million euros from the new Great Fortune Solidarity Provisional Tax. This amount reflects a revision approved by the AirREF, reducing the initial estimate by about half. The amendment, introduced by the PSOE and Unidas Podemos parliamentary groups, allows a substantial discount—up to 80% of the tax due—if the total payable exceeds 60% of the annual taxable base that the personal income tax (IRPF) allocates to major assets, assets and income, also known as the full quota.
Parliamentary approval for the Temporary Solidarity Tax on Great Wealth was reached in the current session. The stated aim of this new government levy is to tax assets exceeding three million euros that would otherwise escape Wealth Tax due to its suppression in certain autonomies, such as Andalusia or the Community of Madrid.
In the same session, discussions will include separate taxes on the banking sector and energy companies. The energy levy targets a first collection of around 4,000 million, with some resources expected to halve the amount the administration will receive. Banks face an additional payment totaling about 3,000 million euros.
Regarding the great wealth tax, the rate structure as proposed is 1.7% for assets between 3 and 5.3 million euros, 2.1% for assets between 5.3 and 10.6 million euros, and 3.5% for assets above 10.6 million euros.
The coalition partners acknowledged that a large portion of taxpayers would be affected by the new tax, potentially facing a burden that exceeds their annual income from work and savings. Latest statistics from the Tax Administration, based on Wealth Tax data, show that in the range from 1.5 million to 6.01 million euros, the majority of collections occur within the 51.3% share. This section includes taxpayers subject to the new tax, and for assets above 6 million euros the share of total revenue is substantially lower, around 33%.
For the typical asset portfolio, the 60% threshold corresponds to about €107,232 as the maximum annual payment. When the IRPF, Inheritance, and Great Fortune quotas are combined, the total can reach roughly €127,539, surpassing the 60% limit that was designed to prevent the inheritance from becoming a confiscatory tax. This ceiling is sometimes referred to as a tax shield.
The proposed changes aim to correct language in Article 3 of the bill, which previously created extraordinary taxes on energy companies, credit institutions, and great fortunes. In particular, the repayment schedule for the Great Fortune tax will be adjusted so that the installments are reduced by up to 50%, ensuring the sum of the three installments (Great Fortune, Inheritance, and Personal Income Tax) remains at or below 60% of the personal income tax base.
Taxpayers’ data suggests high compliance with the new tax, and even with cautious assumptions about the 2020 data versus expected 2023 figures, a notable rise in expected collections for 2023 and 2024 is possible. The ministry now projects a reduction in anticipated revenue from 3,000 million to 1,500 million as previously planned. Positive factors include potential rebounds in stock market values and updated cadastral valuations for the coming year. Nonetheless, taxpayers may still look for ways to structure their assets to minimize the new tax and, where applicable, the inheritance tax in autonomous regions where it remains in force.
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