Spanish Wealth Tax

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Spanish Wealth Tax


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Old 6th February 2012, 03:19 PM
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Does anyone know how Annuities will be valued for the purposes of the newly re-introduced Spanish Wealth Tax? When this was last around in 2007 I understand that in the absence of an actual fund value, the capital value of an annuity would have been calculated by discounting the annual income at the Official rate of Spanish interest which at that time was 5% i.e multiplying the annuity by 20. For an annuity of 20,000 euros this would produce a value of 400,000 euros which after allowances, and disregarding other components of the Wealth Tax calculation, would result in a manageable amount of Wealth tax.

I have read that the new tax is targeted at the rich not the middle classes and about 160,000 of the population are expected to contribute. If my understanding is correct, the current rate of interest is apparently around 1% i.e. a multiplication factor of 100 which on the basis of this not untypical example, would generate a completely unrealistic value of 2 million euros, and could drag into the Wealth Tax net thousands of ‘virtual’ millionaires who would otherwise not have been affected.

Can anyone tell me that I am talking through my hat or, if there is a problem, whether anything is being done about it?

Many thanks

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Old 6th February 2012, 04:11 PM
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Originally Posted by Vinray View Post
Does anyone know how Annuities will be valued for the purposes of the newly re-introduced Spanish Wealth Tax? When this was last around in 2007 I understand that in the absence of an actual fund value, the capital value of an annuity would have been calculated by discounting the annual income at the Official rate of Spanish interest which at that time was 5% i.e multiplying the annuity by 20. For an annuity of 20,000 euros this would produce a value of 400,000 euros which after allowances, and disregarding other components of the Wealth Tax calculation, would result in a manageable amount of Wealth tax.

I have read that the new tax is targeted at the rich not the middle classes and about 160,000 of the population are expected to contribute. If my understanding is correct, the current rate of interest is apparently around 1% i.e. a multiplication factor of 100 which on the basis of this not untypical example, would generate a completely unrealistic value of 2 million euros, and could drag into the Wealth Tax net thousands of ‘virtual’ millionaires who would otherwise not have been affected.

Can anyone tell me that I am talking through my hat or, if there is a problem, whether anything is being done about it?

Many thanks
AFAIK nothing has changed - that is, if the calculations were correct before, then they are still correct.

All that's happened is that the thresholds have been raised.

I suspect, given your figures, that the original calculations were incorrect but will watch this thread with interest.

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Old 7th February 2012, 10:47 AM
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I seem to remember that the capitalised amount was reduced according to the age of the annuitant by the same percentages as that used for calculating the value of usufruct on a property. I can't remember the exact figures but I think it started at 70% then went down by 1% per year over a certain age to a minimum of 10%.

I was also under the impression that the official interest rate for Spain for 2011 was 4% giving, using your example of an annuity of €20.000, a value of €500.000 before applying the percentage reduction.

These are only my recollections and I may be totally wrong. To be assured of the correct advice I would suggest that you ring the AEAT helpline on 901 335533.

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Old 7th February 2012, 12:46 PM
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As a new member I apparently can't post URLs but a site with the name of 'tradingeconomics' has a graph which shows the recent history of the euro interest under the heading Spain Interest Rate and I have assumed that they are one and the same. If so we are talking about 1%, perhaps 1.5% for Spain at the present time. Hope I'm wrong!!

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Old 7th February 2012, 01:46 PM
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This is from the Banco de España web site and is called 'Tabla Tipos De Interés Legal'

Tipo de interés

and more information here:

El interés legal del dinero

Whether this applies to the interest rate to be used when calculating the value of an annuity I have no idea.

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Old 7th February 2012, 04:37 PM
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Thanks for that - it looks very interesting and encouraging but I will make further enquiries before I get too excited

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