The provincial councils of Álava, Bizkaia and Gipuzkoa have agreed on the parameters in which they will implement the Temporary Solidarity Tax on Great Fortunes, which will function as a complementary tax on Wealth and will tax the net assets of natural persons of an amount greater than the 3.2 million euros with rates that will range from 1.50 to 3.50%. The rates finally agreed upon by the deputations are slightly less burdensome than those established in the common regime communities. In Navarra this temporary tax was implemented, in practice, by modifying the rates of the Estate tax and harmonizing them on the same terms as in the rest of the communities.
The PNV and the PSE, the two political formations that govern the councils, announced in February their final decision to implement the Tax on Large Fortunes as complementary to Patrimony. It was an issue that was in question due to Basque fiscal autonomy – the economic concert – and the validity of the Wealth Tax in Euskadi. A part of the PNV was inclined to leave it unexecuted, alluding to the existence of Patrimony, with similar types.
In December of last year, the provincial councils agreed on this tax with the Spanish Government and acquired not only the collection capacity for this new tax, but also the regulations. From there, they decided to promote a legal change to introduce it into the regional regulations and execute it as complementary to Patrimony, avoiding friction between government partners and avoiding the recurring criticisms of Basque fiscal autonomy. We must not forget that Andalusia, Madrid and Murcia took the new tax created by the Government of Pedro Sánchez to the Constitutional Court and, when there was speculation that it would not be implemented in the Basque territories, they even spoke of a “tax island for the rich.” ”, a point that contrasts with the fiscal pressure in the Basque territories, much higher than in the communities that resorted to the Constitutional Court.
Finally, the Temporary Solidarity Tax of Great Fortunes will tax the net assets of individuals of an amount greater than 3.2 million euros with rates that will range from 1.50 to 3.50%.
The tax will be somewhat softer than that applied in the common regime communities. Thus, in the Basque territories, taxation will affect assets above 3.2 million euros, when in other communities it is taxed above 3 million.
The biggest difference, however, has to do with the maximum rate: in the Basque territories 3.5% will be applied for assets above 16 million euros, while in the common regime communities this rate is applied for above 10.7 million.
The other big difference has to do with the validity period. The Tax on Large Fortunes will only be implemented in the Basque territories during the 2023 financial year, while in the other communities it was also implemented during 2022. In any case, the Basque territories implemented the Wealth tax during the last financial year.
Sources familiar with the matter indicate that the retroactive application of this tax for the year 20222 would have had uncertain legal consequences.
In the common regime communities the rates are the following: 1.7% for assets between 3 and 5.3 million euros; 2.1% for assets between 5.3 million and 10.7 million; and 3.5% for assets greater than 10.7 million euros.
In the Basque territories, however, the rates will be the following: 1.7 for assets between 3.2 and 6.4 million; 2.1% for assets between 6.4 and 12.8 million; 2.5% for assets between 12.8 and 16 million euros; and, finally, an applicable rate of 3.5% for assets above 16 million euros.
