Valuing your assets for wealth tax and what is exempt

Terms used

• Valor catastral — The valor catastral is the value the Spanish cadastre assigns to a property for tax purposes.
• Valor liquidativo — The valor liquidativo is the net asset value of one unit of an investment fund.
• Valor de rescate — The valor de rescate is the amount an insurer would pay if you cancelled a life insurance policy.
• Modelo 721 — Modelo 721 is the information return for crypto held abroad, due 1 January to 31 March when the total exceeds EUR 50,000.
• Empresa familiar — An empresa familiar is a family business whose shares can be exempt from wealth tax if strict conditions are met.

Key rules

• Valuation date: Most assets are valued at 31 December, with foreign currency converted at that day's official rate.
• Main home: Your main home is exempt up to EUR 300,000, and regions can change that limit.
• Crypto: Crypto is a wealth tax asset and must be declared even if you also file Modelo 721.
• Bank accounts: Use the higher of your 31 December balance and your last-quarter average balance.
• Family business: The exemption needs at least 5% individually or 20% with your family, plus active management and an active business.

The basic rule

Each type of asset has its own valuation rule. Use the rule for the asset, not what you think it is worth today. Values are fixed at 31 December, except where a rule below says otherwise. Foreign-currency amounts are converted to euros at the official rate on 31 December.

Property in Spain

Value Spanish property at the highest of three figures: its valor catastral (the value on the cadastre), the value the tax authority has checked, or the price stated in your purchase deed.

Property abroad

Value foreign property at what it cost you to acquire. If the value assessed for tax in that country is higher, use that. Convert to euros at the 31 December rate published by the Bank of Spain or the European Central Bank. Do not use today's market price.

Bank accounts and deposits

Use the higher of two figures: your balance on 31 December, or your average balance over the last quarter of the year. This applies to Spanish and foreign accounts.

Shares

• Listed shares: use the average trading price in the last quarter of the year (October to December). The Ministry of Finance publishes the official list of prices each year.
• Unlisted shares: use the theoretical book value from the company's last approved balance sheet. If the accounts were audited with a favourable opinion, use that balance sheet. Also work out the value from capitalising the company's average profits of the last three years at 20%. If that figure is higher, it can be the one that applies.

Rules for unlisted shares can vary by region. Ask a tax adviser to run both calculations.

Funds and life insurance

Investment fund units are valued at their valor liquidativo (net asset value) on 31 December. Life insurance is valued at its valor de rescate (surrender value) on the same date.

Crypto

Declare crypto at its market value on 31 December. Use the average price on that date from the exchange or platform where you hold it. Crypto counts as a wealth tax asset, so leaving it out is a mistake.

Crypto held abroad may also need a separate information return, Modelo 721. It is due from 1 January to 31 March and applies when the total value exceeds EUR 50,000. Declaring it for wealth tax does not replace it.

What is exempt

These assets do not count towards your taxable wealth, under conditions:

• Your main home, up to EUR 300,000. Regions can change this limit.
• Household goods.
• Rights in pension plans.
• Intellectual property rights you hold as the author.
• Business assets used in an economic activity.
• Historic heritage and artworks.
• Certain shares in entities.
• Your family business (empresa familiar).

The family-business exemption

You must meet all of these:

• You hold at least 5% yourself, or 20% together with your family group.
• You carry out management functions in the company.
• Those functions give you more than 50% of your work and business income.
• The company runs an active business and does not just manage assets.

Your shares are exempt in proportion to the business assets the company holds. Part of the value may still be taxable.

Debts

You can deduct personal debts if you can prove them. This includes debts taken on to buy or improve assets. Keep contracts and bank statements. If your assets and income are abroad, expect stricter proof.

Limits:

• Debts tied to exempt assets are not deductible. Where an asset is only partly exempt, you deduct only the matching part.
• Mortgage debt on your main home is deductible only for the part above the exempt amount.

Check the details of the proportional rules with a tax adviser before filing.

Avoiding penalties

Use the prescribed rule for every asset, convert currency on 31 December and include everything. The warning and FAQ below cover the most common mistakes and questions.

Wealth tax traps for new residents

• Valuing property abroad at today's price: Property abroad is valued at what it cost you, or the value set for tax in the country where it is, whichever is higher. A current market estimate is not the figure to use, and the wrong number makes your return incorrect. Find your purchase price and any foreign tax valuation before you start, and use the higher of the two.

• Converting currency on the wrong date: Assets in pounds, dollars or other non-euro currencies are converted to euros at the rate on 31 December, not the rate on the day you bought or arrived. Using another date changes your total. Use the European Central Bank or Bank of Spain reference rate for 31 December.

• Leaving crypto out: Cryptocurrency counts as wealth tax property. It is valued at the average price on 31 December on the exchange or platform that holds it. Crypto held abroad may also need a separate information return, Modelo 721, filed from 1 January to 31 March when the total value is over EUR 50,000. Download a 31 December statement from each platform and check whether the Modelo 721 limit applies to you.

• Using the wrong region's rules: Your region is the one where you were resident for more than 183 days of the year, and it sets the allowances. Using the rules of the region you moved from or plan to move to gives the wrong result. Count your days in Spain by region before you pick the allowances.

• Missing the foreign tax credit: If you paid an identical wealth tax abroad on assets also taxed in Spain, you can claim a credit. It is capped at the lower of the foreign tax paid and the Spanish tax on those assets. Without a claim, you pay twice. Keep proof of the foreign tax paid and claim the credit on your return.

• Filing late or understating assets: Filing late without a prior request from the tax office adds a surcharge of 1% plus 1% for each full month of delay, up to 12 months. After 12 months it is 15% plus interest. Understating assets can bring a penalty of 50% of the unpaid tax, and more if the tax office finds concealment or fraud. File on time. Paying within the deadline cuts a late surcharge by 25%. If you find a mistake, correct it before the tax office contacts you.

Frequently asked questions

How do I value shares in a company that is not listed?

Unlisted shares are valued at their theoretical book value from the company's last approved balance sheet. If the accounts were audited with a favourable opinion, use that balance sheet. The result can be replaced by a higher figure, found by capitalising the average profits of the last three years at 20%.

Do I still need Modelo 721 if I declare my crypto for wealth tax?

Yes, if your crypto is held abroad and its total value is over EUR 50,000, you file Modelo 721 as well. It is a separate information return, filed from 1 January to 31 March. Your wealth tax figure is the market value on 31 December, taken as the average price on that date from the platform that holds it.

Can I deduct my mortgage when I work out my net wealth?

Yes, debts for buying or improving assets are deductible if you can prove them. Mortgage debt on your main home counts only above the exempt amount. Debts tied to exempt assets are deducted only in proportion.

What do I need to meet for the family-business exemption?

You need a holding of at least 5% on your own, or 20% with your family group. You must carry out management functions and earn more than 50% of your work and business income from them. The company must run an active business, and the exemption covers shares in proportion to its business assets.

How do I value a property I own abroad?

Use its acquisition cost, or the value assessed for foreign tax if that is higher.