Reduction in Ibiza Wealth Tax

property tax in Ibiza

Great Ibiza news for 2024 !

The Balearic Islands Parliament has recently ratified an amendment to the 2024 budget that brings about a noteworthy shift in the dynamics of Wealth Tax regulations within the region.

The pivotal adjustment involves elevating the minimum exemption threshold for this tax from €700,000 to a substantial €3,000,000. This modification directly benefits investors holding assets up to €3,000,000, as they are now exempt from the Wealth Tax.

This alteration brings positive implications for both investors who were previously subject to taxation within this bracket and those possessing assets exceeding €3 million.
The former now enjoy complete exemption from the tax, while the latter experience a reduction in their annual tax liability.

It’s crucial to bear in mind that Wealth Tax is an annual obligation due on the 31st of December each year, based on the individual’s wealth at that specific date. The calculation involves assessing assets and deducting relevant items such as private loans and mortgages.

How much wealth tax will you now pay ?

Once the net wealth is determined, the total payable amount is calculated using either the Balearic Islands table or the State table, depending on the taxpayer’s tax residence. Investors residing in the Balearic Islands utilize the Autonomous Community table and whereas foreign investors who are non-tax residents use the State table.

For instance, an individual with a €3,500,000 investment on the island would shift from being taxed on €2,700,000 to a taxable base of €500,000. Notably, on a taxable base of €2,700,000, a foreign investor would have been liable for €28,046.26 per year in wealth tax, whereas with a taxable base of €400,000, the tax is reduced significantly to a total of €1,664.36.

Ibiza tax residents autonomous table for wealth tax
wealth tax for non tax residents state table

Additionally, there are various strategies to minimize wealth tax:

  • Pooling investments with multiple investors to increase the minimum exempt amount.
  • Financing the acquisition at the time of purchase to deduct the acquired debt.
  • Opting for purchases through foreign companies with over 50% of their assets located outside Spain can also be an effective strategy.

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