Supreme Court confirms that non-residents can also apply the 60% tax shield — a major change for those with property and investments in Spain.
Spain’s Wealth Tax Update – There has been a significant development under for anyone who owns property or investments in Spain but is not tax-resident here.
The Spanish Supreme Court has confirmed that non-residents can also benefit from the Wealth Tax “60% shield” — the rule designed to ensure that total taxation does not become confiscatory.
This interpretation, as highlighted by Borja de Abadal Gámiz of Augusta Abogados, marks an important step towards fairer treatment for non-residents who hold assets in Spain.
What has changed
Until recently, Spain’s Wealth Tax cap was linked exclusively to the IRPF, the income tax paid only by Spanish residents. Because non-residents do not file IRPF, they were excluded from the 60% tax limit and could be taxed more heavily than residents in the same circumstances.
The new reform broadens the rule so the limit can now be applied to non-residents as well, using their equivalent income tax instead of IRPF.
In two recent rulings, the Supreme Court concluded that this difference in treatment is discriminatory and contrary to European Union law. Tax residence alone, it stated, cannot justify taxing non-residents more heavily than residents.
The 60% “shield” explained
Spain’s Wealth Tax targets individuals with significant assets, but it includes a safeguard: the combined total of Wealth Tax and Personal Income Tax should not exceed 60% of the taxpayer’s taxable income.
If it does, the Wealth Tax must be reduced, in some cases by as much as 80%, to avoid an excessive overall tax burden.
The Court’s ruling confirms that this same limit must now apply equally to non-residents.
A practical example
So, imagine:
- You earn €100,000 in taxable income.
- You pay €25,000 in income tax (maybe in your home country).
- You owe €50,000 in Spanish Wealth Tax.
Together, that’s €75,000 in taxes — or 75% of your income.
But the Spanish law says the total can’t go over 60% (in this case, €60,000).
So Spain must reduce your Wealth Tax from €50,000 to €35,000, so your total ends up being exactly €60,000 — 60% of your income.
This example illustrates how some non-residents may now be able to reclaim overpaid Wealth Tax from previous years.
A new opportunity for review
For many non-residents, this decision represents an important opportunity to review past tax filings and optimize future planning. Those who pay income tax in their home country while also being subject to Wealth Tax in Spain are particularly likely to benefit from this change.
As Borja de Abadal Gámiz and his firm Augusta Abogados note, the Supreme Court’s interpretation not only clarifies the law but also ensures that non-residents are treated equally under EU principles. This brings greater legal certainty and fairness for individuals and families with cross-border investments and property interests in Spain.
Borja works with high-net-worth (HNW) and ultra-high-net-worth (UHNW) families and family offices with exposure to Spain, advising them on how to legally reduce and manage their tax burden while staying fully compliant.
His perspective highlights how this new ruling can reshape international tax and wealth planning for those holding assets in Spain.
For any further questions you have on Spain’s Wealth Tax update, please contact us or get in touch with Augusta Abogados directly.
