Published: June 15, 2026
I. INTRODUCTION
Spain is one of the few countries in the region that still maintains a Wealth Tax (hereinafter “WT”), which is levied on the ownership of certain assets and rights held by individuals. This tax does not apply solely to tax residents of Spain; it may also apply to non-resident individuals who own assets or rights located within Spanish territory.
In this context, individuals who are tax residents of Mexico and who own real estate in Spain, hold shares in Spanish companies, or have certain investments linked to the Spanish market may be subject to the IP (Property Tax) under the “real obligation” rule; that is, taxation limited to certain assets and rights located in Spain held by non-resident taxpayers.
For these purposes, the IP tax is levied on the taxpayer’s net worth, determined by the difference between the value of their assets and rights and the legally deductible liabilities, encumbrances, and debts. The tax becomes due on December 31 of each year, based on the composition and valuation of the net worth existing on that date.
An analysis of the wealth taxation of tax residents in Mexico requires taking into account not only the rules specific to the IP, but also the possible application of Spanish regional regulations, as provided for in the fourth additional provision of the Wealth Tax Law (hereinafter, “LIP”), the impact of the Temporary Solidarity Tax on Large Fortunes (hereinafter “ITSGF”), and, where applicable, the provisions contained in the Double Taxation Agreement between Spain and Mexico (hereinafter “DTA”).
This article examines the main aspects of wealth taxation in Spain for tax residents of Mexico, with a particular focus on liability based on actual ownership, taxable assets and rights, valuation rules, formal obligations, and the interaction between Spanish domestic law and the bilateral tax treaty.
II. LIABILITY FOR WEALTH TAX BASED ON A REAL OBLIGATION
Taxation based on real connection is the key criterion that determines the scope of Spain’s tax jurisdiction over tax residents of Mexico. Pursuant to Article 5 of the LIP, nonresident taxpayers are subject to tax only on those assets and rights for which there is a sufficient connection to Spanish territory.
This criterion takes on particular significance in the context of international investments, where it is common to find asset structures comprising assets located in different jurisdictions. In such cases, the correct identification of the property and rights that can be considered located in Spain is the essential element for determining the existence and scope of the tax liability.
Taxation based on actual liability has its own specific characteristics in key areas such as the determination of deductible debts, the application of regional regulations, and the formal obligations required of non-resident taxpayers. These issues can be decisive in determining the final tax burden and require a comprehensive analysis of applicable federal, regional, and international regulations.
III. PROPERTY AND RIGHTS LOCATED IN SPAIN SUBJECT TO TAXATION
i. Real estate located in Spain
Real estate located in Spain constitutes one of the main scenarios subject to property tax. Consequently, ownership of residential properties, commercial premises, offices, land, or any other real estate located in Spain may give rise to a property tax liability, as may real rights established over Spanish real estate, such as usufruct or bare ownership, the valuation of which must be carried out in accordance with the specific rules set forth in Articles 20 et seq. of the Real Property Tax Law (LIP).
ii. Interests in Spanish companies
Holdings in entities resident in Spain may also be subject to corporate income tax when they form part of the assets of a nonresident individual.
The valuation of these holdings will depend on whether or not the entity is listed on organized markets, defined as those official secondary markets subject to public oversight. The rules set forth in Articles 15 and 16 of the LIP shall apply in this regard.
iii. Partnership interests involving Spanish real estate assets
Taxation based on actual ownership is not limited to the direct ownership of real estate located in Spain. Spanish regulations expanded certain cases of taxation based on real property ownership by considering certain equity interests in foreign entities to be located in Spanish territory if at least 50 percent of their assets consist, directly or indirectly, of real estate located in Spain.
This rule extends the territoriality principle to cases of indirect ownership, such that corporate shares whose value derives predominantly from real estate assets located in Spain are subject to taxation, even if the taxpayer does not hold direct ownership of such properties
iv. Other property and rights located in Spain
In addition to the cases mentioned above, other property and rights located, exercisable, or enforceable within Spanish territory may be subject to the IP, such as bank deposits, loans, securities, or other financial assets that have a connection to Spain.
IV. VALUATION OF PROPERTY AND RIGHTS SUBJECT TO TAX
To determine the tax base for the IP, each asset or right must be valued in accordance with the specific rules set forth in the LIP. The regulations establish different criteria depending on the nature of the asset, distinguishing, among other things, between real estate, tradable and non-tradable securities, bank deposits, life insurance, and real rights.
In the case of real estate, the valuation is based on the higher of the assessed value, the value determined or verified by the government for the purposes of other taxes, and the purchase price, consideration, or acquisition value. Meanwhile, shares, bank deposits, and other financial assets are valued in accordance with the specific rules established for each category of assets. Therefore, the correct determination of the value of each asset is essential for accurately calculating the corresponding tax liability.
V. DEDUCTIBLE DEBTS
Pursuant to Articles 9 and 25 of the LIP, in cases of taxation based on actual ownership, only encumbrances and liens on property and rights located in Spain are deductible, as well as debts incurred for their acquisition or financing.
Therefore, not all of the taxpayer’s financial obligations may reduce the tax base; only those that are directly related to the assets and rights subject to taxation in Spain may do so.
VI. TAX EXEMPTION THRESHOLD AND REGIONAL REGULATIONS APPLICABLE TO TAX RESIDENTS IN MEXICO
The fourth additional provision of the LIP grants non-resident taxpayers the right to opt for the application of the regulations of the Autonomous Community in which the greatest value of the property and rights located in Spain subject to taxation is situated. This option must be exercised in its entirety, applying all relevant regional provisions. If the option is not exercised, state regulations (LIP) apply, which may be less favorable depending on the specific Autonomous Community.
The application of regional regulations can be particularly significant with regard to issues such as the tax-exempt threshold, the applicable tax rate, or the tax credits provided by each autonomous community, and may result in significant differences in a taxpayer’s effective tax burden.
VII. TEMPORARY SOLIDARITY TAX ON LARGE FORTUNES
The ITSGF is a state tax, complementary to the IP, levied on the net worth of individuals when it exceeds 3,000,000 euros on the accrual date.
This tax applies to net worth exceeding 3,000,000 euros, although the regulation provides for an additional exemption threshold of 700,000 euros for taxpayers subject to the tax on a real basis, including tax residents in Mexico who own property or rights located in Spain. Consequently, such taxpayers will be subject to the ITSGF starting from the first euro of net worth exceeding 3,000,000 euros, without being able to benefit from the additional reduction that applies to tax residents in Spain.
The taxable base is generally determined in accordance with the rules applicable to the IP, and provision is also made for the deduction of the amount actually paid for the latter tax. Consequently, individuals who are tax residents of Mexico and hold assets or rights located in Spain must consider both taxes together when their taxable assets reach the legally established thresholds.
VIII. FORMAL REQUIREMENTS AND FILING OF THE RETURN
Tax residents of Mexico who are subject to corporate income tax in Spain must, where applicable, comply with the following formal obligations:
a) Filing of the IP return using Form 714, when a tax liability remains after applying the applicable deductions, credits, and other tax benefits, or when the value of the assets and rights determined in accordance with tax regulations exceeds 2,000,000 euros.
(b) Determination and valuation of the property and rights subject to the tax, in accordance with the rules set forth in the LIP.
(c) Identification of deductible encumbrances, liens, and debts, provided they relate to property and rights located in Spain.
d) Election, where applicable, of the applicable regional regulations, in accordance with the Autonomous Community in which the greatest value of the subject property and rights is located.
e) Appointment of a representative in Spain, under the terms set forth in Article 6 of the LIP, in two cases: (i) when the non-resident taxpayer operates in Spain through a permanent establishment, or (ii), regardless of the foregoing, when the tax authorities expressly require it due to the amount or characteristics of the assets located in Spanish territory.
In addition, when the ITSGF applies, the potential requirement to file Form 718 must be assessed.
IX. IMPACT OF THE DOUBLE TAXATION TREATY BETWEEN SPAIN AND MEXICO
The taxation of assets held by tax residents of Mexico who own property or investments in Spain must be analyzed taking into account not only Spanish domestic law but also the provisions of the tax treaty between the two countries.
In general, international tax treaties assign specific taxing rights based on the nature and location of the assets, which is particularly relevant in the case of real estate located in Spain and certain equity interests linked to Spanish real estate assets. Consequently, the application of the treaty must be verified in each specific case to determine the scope of Spanish taxing rights and avoid situations of international double taxation.
X. CONCLUSIONS
The IP may apply to individuals who are tax residents of Mexico and own certain assets or rights located in Spain, particularly real estate, equity interests, and other investments with an economic connection to Spain.
The correct identification of taxable assets, their valuation, the potential deduction of certain debts, and the application of regional regulations are essential elements for accurately calculating the tax liability. Furthermore, the coexistence of the IP and the ITSGF underscores the importance of a comprehensive analysis of one’s financial assets.
Finally, in cases involving cross-border elements, it is essential to take into account the provisions of the treaty between Spain and Mexico in order to correctly determine the scope of Spanish tax jurisdiction and avoid situations of international double taxation.
If you need assistance or advice regarding the taxation in Spain of assets, investments, or wealth structures with ties to Spain, at Gentile Law we have a team of experts in this field ready to assist you.
Contact us:
Vera Fernández Leiva
paralegal1@gentile.law
+34 676 001 029
Marta Gavin Hermosilla
Corporate Legal Advisor at Gentile Law
martagavin@gentile.law
+34 604510566
Ana García Ginés
Tax Associate at Gentile Law
anagarcia@gentile.law
+34 604 512 160
This publication is for informational purposes only and should not be construed as legal advice.