Are You Eligible for a Wealth Tax Refund?
The imminent resolution of an appeal against the 2021 Budget Law could allow individuals to reclaim Wealth Tax payments made in 2021 and 2022
The Conservative Party initiated an appeal against the 2021 Budget Law, and while the outcome remains uncertain, if successful, this appeal could lead to the declaration of the Wealth Tax as unconstitutional for the years 2021 and 2022. This would, in turn, result in the refund of the tax paid during those years.
However, based on past experiences, the Constitutional Court tends to restrict such refunds to individuals who had already filed a refund claim before the ruling. This means that those who act promptly and file their refund claims now, rather than waiting for a retroactive decision, may have a better chance of securing a refund. The current rumors suggest that the Court's decision could be imminent, possibly within a few weeks.
If you have paid Wealth Tax in 2021 and/or 2022, you might be eligible for a refund if the Constitutional Court rules favorably. We strongly recommend not waiting and taking action to file a refund claim before the Court's decision is announced.
Wealth Tax Updates for 2023 in Andalucia
A significant change has occurred regarding the Wealth Tax for the year 2023 in Andalucia. The administration of this tax has now been fully delegated to Regional Governments, resulting in 17 different regulations in effect across the country.
Madrid had long provided a 100% allowance on this tax. Andalucía, also under Conservative Party governance, introduced a similar 100% allowance in 2022, setting the precedent for other regions governed by the same party to follow suit.
However, the Central Government, led by the Socialists, introduced the solidarity tax on substantial fortunes in 2022. This tax, which also applies in 2023 and may be extended, operates at the national level and is applicable to individuals with assets exceeding 3 million euros. The Conservative Party challenged this new tax in the Constitutional Court, but to everyone's surprise, the Court recently upheld its constitutionality.
In response, Law 12/2023, passed on 26 December, approving the 2024 Budget in Andalucia, introduced a temporary amendment regarding Wealth Tax allowances. This amendment only applies while the solidarity tax is in effect. Taxpayers now have the option to either maintain the 100% allowance and pay the solidarity tax to the State or opt for a variable allowance, paying the same amount of solidarity tax to the Regional Government. The law came into effect on 1st January 2024, with the changes to Wealth Tax applicable from the tax year 2023.
Madrid has also implemented similar measures.
Source / Further information: Santiago Lapausa from Cobo Blazquez Carretero Lawfirm (CBC Abogados)
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