Tax on Large Fortune: Temporary Taxation for Individuals with Assets Over €3,000,000

What Is the Tax on Large Fortune (IGF)?

The Tax on Large Fortune (IGF) applies to individuals who hold a net worth exceeding €3,000,000 at the end of the fiscal year.
It acts as a complement to the Wealth Tax (Impuesto sobre el Patrimonio, IP).

This is a temporary tax, created under Article 3.Twenty-eight of the IGF, and is expected to remain in force for two fiscal years — 2022 and 2023 — unless the Spanish Government decides to extend it.

Since the tax accrues on 31 December each year, the last fiscal year affected will be 2024.

(Official reference: Ley 38/2022, de 27 de diciembre).

Who Must Pay It?

The taxpayers of the IGF are defined by reference to the Wealth Tax (IP):

• By personal obligation: individuals resident in Spain, taxed on their worldwide net worth.
• By real obligation: non-residents, taxed only on assets or rights located in Spain.

Determining Spanish Tax Residence

A person is considered a Spanish tax resident if they meet one of the following:

• They spend more than 183 days per calendar year in Spain (sporadic absences included unless proven residence elsewhere).
• Their main economic interests or business activities are based in Spain.

Tax residents are taxed on their worldwide assets but enjoy two exemptions:

• A €700,000 general exemption.
• An additional €300,000 exemption for their primary residence.

Non-Residents and Foreign Investors

Non-residents from countries without a Double Taxation Agreement (DTA) with Spain are subject to two different taxes:

Wealth Tax (IP)

They must declare the value of all assets located in Spain, including real estate, vehicles, bank accounts, and shares.
Since 2021, all non-residents, whether EU or not, may apply the regional regulations of the Autonomous Community where their assets are located.

If the assets are located in Madrid or Andalusia, they may apply the 100% rebate, paying nothing but still having to declare if assets exceed €2,000,000.

Tax on Large Fortune (IGF)

Non-residents must also declare their net assets in Spain, deducting debts as per Article 9.4 of the IP Law, and apply the IGF rates.

However, non-residents cannot apply the €700,000 exemption, reserved only for personal (resident) taxpayers.

Foreign Companies Owning Spanish Real Estate

Individuals who own shares in foreign companies whose main assets (over 50%) consist of real estate in Spain are subject to Wealth Tax (IP).

The assets of these companies are calculated at market value. If more than 50% of the assets are Spanish properties, the individual is taxed only on the value of those Spanish assets.

Example:
A U.S. resident who owns a German company with properties in Mallorca (€1,000,000) and Miami (€600,000) will only be taxed in Spain for the Mallorca property.

The Golden Visa and Tax Implications

The Golden Visa allows non-EU investors to reside and work in Spain with their family but does not imply tax residency.

To maintain the permit, investors only need to visit Spain once a year, without the obligation to stay more than 183 days.

A person becomes a tax resident only if they:

• Spend more than 183 days per year in Spain, or
• Have their main business or economic interests there.

Related Taxes

• Real Estate Tax (IBI): payable annually by residents and non-residents alike.
• Non-Resident Income Tax (IRNR): applied to rental income at 24%.
• Wealth Tax (IP): applicable if total assets in Spain exceed €700,000, depending on the region.

If the property is not rented, a notional income is calculated based on its cadastral value (1.1% or 2%).

Interaction Between IGF and Wealth Tax

The amount paid in Wealth Tax (IP) reduces the amount due under the IGF.
The IGF thus has a greater impact in regions like Madrid and Andalusia, where the IP is 100% rebated.

There is a global limit: the combined total of IGF + IP + Personal Income Tax (IRPF) cannot exceed 60% of a taxpayer’s taxable income.
However, this limit only applies to residents — non-residents do not benefit from it.

Legal Guidance from Frau Legal

At Frau Legal, we advise both residents and foreign investors on how the Tax on Large Fortune (IGF) interacts with other taxes, such as Wealth Tax (IP) and Personal Income Tax (IRPF).

Our team provides strategic tax planning, helping you understand your obligations, exemptions, and regional advantages under Spanish law.
We ensure that your investments in Spain remain compliant, optimised, and protected.