Daniel Kohn is American, an executive at a venture capital fund, and has lived in Madrid since 2018 with his wife, Laura, who is Spanish. They share 50/50 a flat in Chamberí valued for the purposes of the tax at 1,200,000 €, with 400,000 € of mortgage outstanding. Daniel also has a portfolio with a New York broker worth 1,500,000 € and a house in Florida worth 300,000 €. Laura has 700,000 € in Spanish funds. When he arrived in Madrid, a colleague told Daniel that "wealth tax does not exist in Madrid". He has never filed Modelo 714. Neither has Laura. One of the two has got it right.
Relieving is not abolishing
The wealth tax is a national tax, but it is devolved to the autonomous communities (Spain's regions), which can set their own tax-free allowance, their own scale and deductions and reliefs on the tax bill. When a region grants relief, the tax still exists: it is calculated in full and the relief is applied at the end, to the bill. The Comunidad de Madrid, the Madrid regional government, is the best-known example of a region that grants relief, and the scope of its relief, which currently has a transitional treatment linked to the national solidarity tax, appears in the table on the page about the wealth tax together with the other regions.
Article 37 of Law 19/1991 closes the door on the idea that a relief means not filing. It requires a return from anyone with tax to pay "once deductions or reliefs have been applied", but it adds a second route: even if there is no tax, those whose assets or rights exceed 2,000,000 € are obliged to file.
Daniel: the relief brings the bill to zero, but he files
First, the two-million test. According to the Agencia Tributaria, all assets are added up, exempt or not, without deducting debts:
- Half of the flat: 600,000 €.
- Portfolio in New York: 1,500,000 €.
- House in Florida: 300,000 €.
- Total: 2,400,000 €.
It exceeds 2,000,000 €. Daniel is obliged to file Modelo 714, whatever the result.
Now, what the result would be before the relief. To illustrate it we use the national allowance and scale; the region has its own:
- Assets: 2,400,000 €.
- Main home exemption on his half: 300,000 €. That leaves 2,100,000 €.
- Mortgage: 200,000 € is his share, but his half of the flat is exempt for 300,000 out of 600,000, so only half is deducted, 100,000 €. Tax base: 2,000,000 €.
- National tax-free allowance: 700,000 €. Taxable base: 1,300,000 €.
- Gross tax using the national scale in article 30.2: 8,190.36 €.
That is the amount the relief reduces or eliminates. If the relief applicable that year brought it to zero, Daniel would pay nothing, but he would still have to file the return.
The house in Florida counts too
Daniel is resident in Spain, so he is taxed on a personal basis (art. 5.Uno.a): on all his wealth, wherever it is. The house in Florida and the New York portfolio are added like any Spanish asset. Article 32 allows a deduction, within limits, for what is paid abroad under a tax of a personal nature on those same assets. Whether what Daniel pays in Florida falls into that category depends on the nature of that tax under its own law, and that must be confirmed by the client's adviser there. In his case, with the bill relieved, the question has no practical effect.
Laura: she does not file, and that is correct
- Half of the flat: 600,000 €. Funds: 700,000 €. Total assets: 1,300,000 €. It does not reach 2,000,000 €.
- Tax base: 1,300,000 − 300,000 of exemption − 100,000 of deductible mortgage = 900,000 €.
- With the national allowance, a taxable base of 200,000 € and a gross tax of 432.87 €.
- If the relief brings it to zero, there is no tax to pay and the asset threshold is not crossed either.
Laura has no obligation. The same house, the same region and the same relief lead to different answers for each spouse, because the tax is individual.
| Daniel | Laura | |
|---|---|---|
| Assets without deducting debts | 2,400,000 € | 1,300,000 € |
| Tax base | 2,000,000 € | 900,000 € |
| Gross tax using the national scale | 8,190.36 € | 432.87 € |
| Tax after full relief | 0 € | 0 € |
| Files Modelo 714? | Yes, because assets exceed 2,000,000 € | No |
If there is no tax, there is no late-filing surcharge or interest, because no payment is missing. But failing to file a compulsory return is an offence under article 198 of the Ley General Tributaria, the Spanish general tax law: a fixed fine of 200 €, which is halved if the return is filed late without a prior request from the tax authorities. The amount is small; what matters is that the authorities review that year with Daniel's wealth in view, including what he holds abroad.
The national tax the relief does not touch
The regional relief does not reach the temporary solidarity tax on large fortunes, which is a national tax and is not devolved. It only taxes net wealth above 3,000,000 €, and in practice only produces a bill above about 3,700,000 €, because it has a tax-free allowance of 700,000 € and a first band at 0 % up to 3,000,000 € of taxable base. Daniel, with a tax base of 2,000,000 €, is outside it. If his portfolio doubled, he would be caught, and what his region does not collect in wealth tax the State would collect. The mechanism is in what the solidarity tax is.
Why one year's relief is no guide to the next
Reliefs are approved by regional law and can change from one tax year to another: rise, fall, become partial or be made conditional on what the State does. That is why it is unwise to assume that what was zero in 2024 will be zero in 2025. The table on the page about the tax sets out each region's position, and it is worth reviewing before each filing season.
Where you are resident also counts. If Daniel moved to another region, the applicable rules are not decided by the padrón (the municipal register of residents) on 31 December, but by the residence rules for devolved taxes, which look above all at where you have spent the most days. We deal with it in which region's rules apply.
What Daniel did next
He filed Modelo 714 for the last tax year on time. As he had also exceeded two million in the previous years, we checked which of them were not yet time-barred and he filed them late without a prior request, with a zero bill and the fine halved if the authorities imposed it. The order and the risks of that regularisation are explained in I have never filed it. We always warn of the same thing: filing late reduces the problem, but it does not guarantee that the authorities will not review the substance.
If you live in a region with a relief and think you are close to the threshold, the wealth tax form lets you run the check with your own figures. The general rules on the threshold are in from what amount you have to file, and the guide on the obligation to file wealth tax covers the borderline cases.
The table of reliefs by region, the two-million threshold and the solidarity tax are dealt with on the Salama Tax page on the wealth tax.