Non-resident taxpayers may also apply the tax shield under Article 31 of the Wealth Tax Law

Article 31.1 of the Wealth Tax Law (“WTL”) establishes a mechanism for limiting full tax liability, which operates jointly with Personal Income Tax (“PIT”).

Under this provision, the sum of the total tax liabilities payable under both taxes may not exceed 60% of the sum of the PIT tax bases for taxpayers subject to wealth tax on the basis of a personal obligation. Should this limit be exceeded, the wealth tax liability will be reduced, although the reduction may not exceed 80% of the full wealth tax liability. Until now, unlike resident taxpayers, non-resident wealth tax taxpayers in Spain, who are taxed on the basis of a real obligation, could not apply this limit, given that the PIT tax bases and liabilities must be taken into consideration, a tax which non-residents do not pay. This is yet another instance in which non-residents received different, and usually worse, treatment than residents.

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