As Expansión points out, the tax on large fortunes of more than 3 million euros is about to be approved.

The latest amendments have introduced a minimum exemption of 700,000 euros, which raises the threshold of wealth required to pay the tax to 3.7 million euros. This will mean applying a rate of 1.7% to wealth between 3 and 5 million euros; 2.1% from 5 to 10 million euros; and 3.5% for wealth exceeding 10 million euros. The measure will affect wealth registered on 3 December 2022.

Experts consider that its entry into force in a few weeks’ time leaves little room for manoeuvre for taxpayers’ estate planning. However, tax experts specialising in large estates are already working to prevent their clients from overpaying. In statements to the aforementioned media, Pedro Fernández, Managing Partner of Kinship, points out that “it will be the residents of the Autonomous Community of Madrid who will most feel the impact of the Temporary Solidarity Tax on large fortunes, which many of them will manage with the classic estate tax planning tools: deferral of income to optimise the joint limit or investment in exempt assets, notably the family business, without forgetting the challenge of self-assessments based on clear deficiencies in the regulation itself”.

“Many of those affected, especially foreigners who have taken up residence in Madrid and who are not yet affected by the exit tax, will find it easier to transfer their residence to another country. Those who were in the process of coming to settle down have simply changed their plans and directed their interest to other territories”, he concludes.

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