Is it possible to claim back the wealth tax paid for 2021 and 2022?


Pedro Sánchez, in the General State Budget Law for 2021, as part of his crusade against those whom he considered to be “rich”, introduced significant modifications to the wealth tax legislation.

The most significant amendments were the increase in the maximum marginal rate of wealth tax from 2.5% to 3.5% and the aim to convert the wealth tax, which until then was considered a temporary tax (although renewed every year), into an indefinite tax. Due to the rush to have these changes incorporated into the yearly budget of 2021, this new legislation was not well written and the opposition parties considered the changes to be illegal.

As a consequence the Partido Popular, the leading opposition party in Spain, filed an appeal against the wording of Article 66 of the General State Budget Law for the year 2021, to the Constitutional Court, still not resolved by this court.

If the allegations are accepted, it would mean that there is a possibility that the wealth tax legislation could be declared unconstitutional from the moment it was modified. Unfortunately, it is worth reminding our readers, that the current members of the court that will make the final decision is made up of seven judges, who in our opinion are in favour of the current socialist government. Nevertheless, maybe this time they will make their decision based on the legislation and not based on their ideas, overall a decision that will benefit Spain.

What would it mean that the wealth tax was declared unconstitutional?

There are two options that the judges could follow, depending on what part was to be declared unconstitutional:

1) Modification of the tax rate. If declared unconstitutional, it would mainly affect those autonomous communities that do not have their own tax rate and non-residents who use the state rate. Those autonomous communities with their own rates would not be affected.

2) Definitive abolition of the wealth tax. If the constitutional court declares that converting the wealth tax into an indefinite tax is illegal, the consequence would be that a 100% rebate would be applicable for the tax years 2021 and beyond. This would require the administration to fully refund the tax paid in those years.

Is there anything that can be done at the moment?

It is important to consider what happened to the Plusvalia tax claim, a claim done also to the constitutional court. When the Plusvalía tax was considered illegal to be paid by a person who was making a loss in the sale of their Spanish property, only taxpayers who had claimed back the tax paid or had requested a rectification on their self-assessment, before the date that the court ruling was published, were the taxpayers who were able to benefit from the court’s ruling.

Consequently, if you have paid wealth tax for the years 2021 (payable in 2022) and 2022 (payable in 2023), and the final ruling is that wealth tax is declared unconstitutional, to benefit from this decision, you must claim the wealth tax paid back as soon as possible, before the court makes its ruling.

We can help you with this claim. Contact us and we will carry out an individual analysis of your situation and determine if a claim is appropriate or not.

Spence Clarke specialises in the provision of Spanish tax, accounts, law and labour services, mainly to foreigners with interests in Spain. Our cross-border knowledge helps clients adapt to the Spanish system with the minimum of doubt and disruption. If you have any questions about this article or any other matter contact us, with no obligation, to see how we can help you.