Wealth Tax for Retirees on the Costa Blanca

Who pays wealth tax in Spain

Wealth tax applies to individuals with net assets above €700,000 in the Valencian Community. That is the sum of everything you own — property, bank deposits, shares, vehicles, jewellery, art — minus debts such as mortgages and loans. Crucially, your primary residence receives an additional €300,000 exemption, so most retirees who own one modest home and hold cash or pensions below €400,000 pay nothing at all.

The tax is annual, declared each May alongside your income tax return (Modelo 100/714). If you become tax-resident part-way through the year you still declare for the whole year.

Valencian Community rates and allowances

Assets that count — and those that don't

Everything worldwide counts if you are Spanish tax-resident. That includes your UK buy-to-let, your Dutch investment portfolio, your German savings bonds and your holiday home in France. Non-residents are only taxed on Spanish situs assets (mainly Spanish real estate).

Pension pots are exempt while untouched — but once you draw a lump sum or annuitise, the capital may fall into the net. Life insurance policies with a surrender value typically count. Household goods, cars and art under a de minimis value are usually ignored in practice.

Common retiree scenarios

Mitigation strategies

If you sit just above the threshold, there are legal ways to reduce or eliminate the liability. The most common: split assets equally between spouses (each gets their own €700,000 allowance), keep pension pots in drawdown rather than crystallised lump sums, and use Spanish-compliant investment bonds that defer wealth-tax recognition until withdrawal. Debt is deductible, so retaining a small Spanish mortgage can sometimes be tax-efficient even if you could pay it off.

Declaration and payment

Wealth tax is declared on Form 714, submitted to the Agencia Tributaria between April and June each year. Most retirees use a gestor or tax adviser because the valuation rules for property and foreign assets are not straightforward. Payment is by direct debit or bank transfer once the declaration is accepted.