The new tax that will cover large capital gains and personal income tax (IRPF) savings raises serious doubts among tax lawyers due to the There will be stark differences between residents and non-residents when it comes to paying taxes on a capital gain. For this reason some experts such as Alejandro del Campo, the lawyer who overturned the tax penalties for foreign assets of Cristóbal Montoro’s controversial 720 model, are studying to bring the new tax to Brussels.
The coalition government last week unveiled the package of tax measures which includes, among other things, a temporary tax on large assets, tax breaks for low-income taxpayers, a setback for large consolidated groups in the ‘corporate tax and the aforementioned increase in personal income tax on substantial savings income. Many of these measures are included in the draft General State Budget (PGE) that the Executive will present today at the Congress of Deputies.
The new design of the savings tax, in particular, plans to increase the tax rates in the personal income tax for higher capital gains, a measure that will affect around 18,000 taxpayers and which expects to raise almost 200 million euros additions in 2024.
Between 200,000 and 300,000 euros of profit, the rate applied will go from the current 26% to 27%. For their part, yields exceeding € 300,000 will be taxed at 28%, two percentage points more than today. However, and this is where Del Campo sees a “clear violation of the principle of equality”, whoever is registered in other countries and pays non-residents’ personal income tax will have to pay at a single rate of 19% whatever the capital gain. The Ministry of Finance confirms, in fact, that the tariff for non-residents will not undergo any changes for the moment.
Del Campo illustrates the gap between residents and non-residents with the example of the sale of a property in Spain. In the event of a capital gain of half a million euros, those who have their habitual residence in another country will have to pay 19%, paying a total of 95,000 euros to the tax authorities. Residents with a similar benefit, on the other hand, will have to pay almost 128,000 euros, 34.6% more.
The difference is greater as the capital gain increases. The operation of a luxury property that requires an annuity of one million euros will result in the resident paying 267,000 euros, 40% more than those who regularly reside in another country. A capital gain of 2 million euros, on the other hand, will result in a payment of 380,000 euros for the non-resident. For the resident, the settlement will be almost € 550,000, 44% more.
is “so disparate” tax treatment It’s the one that can give rise to a challenge, explains Del Campo. On the one hand, he exercises, the violation of the principle of equality contained in Article 31 of the Constitution is evident. “But it seems that such a brutal difference in treatment, devoid of logic and justification, could also violate EU law,” he adds. Specifically, Article 21 on the free movement of persons, since this gap presupposes “a clear invitation to remain as non-residents”.
There are precedents that could justify the expert’s approach. Until 2006, non-residents in Spain paid a rate of up to 35% on a capital gain from the sale of a property, while residents paid a rate of 15%. Brussels, in 2004, initiated a infringement procedure against Spain for this divergence which led the legislator to establish a single rate of 18%. In parallel, the Court of Justice of the European Union condemned Spain for this differential treatment of non-residents which violated the free movement of capital. Since 2010, however, the rate for residents has increased, while that for non-residents has remained at 19%.
The difference between residents and non-residents at the time of the payment of taxes on these incomes was already considerable before the last change in the Treasury. However, with these changes, “let’s see how the differences are increasing“.
According to the lawyer, there are still many foreigners who, “despite the wealth tax”, are considering the possibility of becoming resident in Spain. However, if they have to pay 100,000 or 150,000 euros more to sell the house, “it is likely that they will decide to continue to maintain their residence in another country”.
