Spain to Scrap Penalty for Non-Residents Paying the Millionaire Tax

A Tax Discrimination That Courts Have Now Struck Down

Spain's Ministry of Finance is preparing a reform to its so-called solidarity tax on large fortunes — commonly referred to as the "millionaire's tax" — that will end a form of tax discrimination affecting wealthy non-resident taxpayers in Spain.

The change will extend a crucial total tax liability cap to non-residents who pay wealth tax in Spain, bringing them into line with the treatment already available to residents. The reform follows a Supreme Court ruling in December that found the exclusion of non-residents from the cap to be discriminatory — and the Ministry is now applying the same logic to the solidarity tax.

Spain's Two Wealth Taxes Explained

To understand the change, it helps to know that Spain operates two separate taxes on net worth:

• The standard wealth tax (Impuesto sobre el Patrimonio) — levied on net assets above a threshold that varies by region
• The solidarity tax on large fortunes (Impuesto de Solidaridad a las Grandes Fortunas) — introduced more recently as a national-level complement to the wealth tax, applying to taxpayers with assets exceeding €3 million

You may see the second referred to as the "solidarity tax" or the "millionaire's tax" in Spanish media. Both taxes can apply simultaneously, and both are relevant to non-residents who hold property or other assets in Spain above the applicable thresholds.

The 60% Cap — and Why Non-Residents Were Excluded

The Spanish tax system includes a total tax liability limit — a ceiling designed to prevent the combined burden of income tax and wealth tax from becoming confiscatory. Under this rule, the combined total of a taxpayer's personal income tax (IRPF) and wealth tax cannot exceed 60% of their taxable income base.

This cap is an important protection. Without it, wealthy individuals whose assets generate relatively modest income could face a combined tax bill that exceeds what they actually earned in a year — an outcome that courts have recognised as disproportionate.

Until now, however, this cap applied only to residents. Non-residents who paid wealth tax on Spanish assets — for example, British or other foreign nationals who own high-value property in Spain but do not live here full-time — were excluded from the protection.

The Court Rulings That Forced the Change

The exclusion of non-residents has been challenged through the courts, and those challenges have been successful. Spain's Supreme Court ruled that the difference in treatment — allowing residents to apply the 60% cap while denying it to non-residents — was "discriminatory" and unjustified.

Following that ruling on the wealth tax, Spain's Central Economic-Administrative Court (TEAC) went further, ruling that both residents (liable on a personal basis) and non-residents (liable on a real obligation basis — meaning they hold assets or rights within Spain) may apply the total tax liability limit to both the wealth tax and the solidarity tax on large fortunes.

The Ministry of Finance has now published a draft ministerial order amending the tax return form for the solidarity tax — the formal mechanism through which the reform is being implemented.

What Changes in Practice

From the implementation of the reform, non-resident taxpayers subject to Spain's solidarity tax on large fortunes will be able to apply the same 60% total tax liability cap that residents have always been able to use. This means:

• The combined total of income tax and wealth-related taxes paid cannot exceed 60% of taxable income
• Where the combined bill would have exceeded that threshold, a reduction applies to bring it within the cap
• Non-residents with significant Spanish assets — particularly high-value property — who have previously been paying above the cap will now be entitled to relief

The Spanish press has described this as a change in the "small print" of the tax rules, but for affected individuals the financial impact can be substantial — particularly for those with large Spanish property portfolios generating relatively modest rental income.

Who Is Affected?

The solidarity tax on large fortunes applies to taxpayers with net assets exceeding €3 million. For non-residents, it is assets held within Spain — primarily real estate — that count towards this threshold.

The reform is therefore most relevant to:

• Wealthy foreign nationals who own high-value property in Spain but are not tax resident here
• British expats who split their time between Spain and the UK without meeting the 183-day Spanish tax residency threshold
• Foreign investors with significant Spanish real estate or other Spanish-based assets

If you believe you may have been paying above the 60% cap in previous years as a non-resident, it is worth speaking to a Spanish tax adviser — there may be grounds to reclaim overpaid tax going back to when the solidarity tax was introduced.

This article is based on reporting from The Local Spain, published March 26, 2026. This article is for informational purposes only and does not constitute tax or legal advice. For advice specific to your situation, consult a qualified Spanish tax adviser or gestor.