Owning a property in sunny Spain or picturesque Italy is a dream for many. However, along with the joy of ownership come tax obligations that are often complex and dynamic. Two of the most discussed taxes for foreign owners are the Spanish Wealth Tax (Impuesto sobre el Patrimonio) and the Italian tax on foreign properties (IVIE). Although both affect assets, they function in fundamentally different ways. Understanding these differences is key to effective financial planning and avoiding unpleasant surprises in 2025.
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This analysis will delve into the structure of both taxes, their thresholds, and specifics to provide a clear picture for potential and current property owners in these two Mediterranean countries.
The Wealth Tax in Spain: Regional Differences and the State “Solidarity Tax”
The Spanish Wealth Tax is an annual tax levied on the net value of an individual’s assets. It’s important to know that it affects both local tax residents (on their worldwide assets) and non-residents (only on their assets located in Spain).
Main Tax Parameters
- National Tax-Free Allowance: The standard threshold is €700,000.
- Additional Exemption: Tax residents also benefit from an additional exemption of up to €300,000 for their primary residence.
- Progressive Rates: The rates range from 0.2% to 3.5%, depending on the value of the taxable base.
- Filing Obligation: Even if no tax is due, filing a return is mandatory if the gross value of your assets in Spain exceeds €2,000,000.
Regional Variations and the new “Solidarity Tax” (ITSGF)
A key feature of the wealth tax Spain for foreigners is that autonomous communities have the right to modify thresholds and rates. This creates significant differences:
- Madrid and Andalusia: Apply a 100% relief, which effectively eliminates the tax at the regional level.
- Catalonia: The tax-free allowance is lower at €500,000.
- Valencia: Starting in 2025, the threshold for tax residents increases to €1,000,000.
To counteract the regional reliefs, the government introduced a state-level “Solidarity Tax on Large Fortunes” (ITSGF) in 2023. It applies to net wealth over €3,000,000 and cannot be eliminated by regional authorities. This means that even in Madrid and Andalusia, owners with assets above this threshold will be liable. The process of buying a property in Spain requires detailed knowledge of these specific regional and national regulations.
The Italian IVIE Tax: A Focus on Properties Outside Italy
Unlike the Spanish model, the Italian IVIE tax Italy has a completely different purpose. It is not a universal property tax but is aimed solely at Italian tax residents who own properties outside the country’s borders.
Key Characteristics of IVIE:
- Liable Persons: Only individuals who are tax residents of Italy.
- Object of Taxation: Real estate located outside of Italy.
- Tax Rate: A fixed rate of 1.06% (effective from 2024, previously 0.76%).
- Calculation of Tax Base: For properties in the EU, the base is the cadastral value; for properties outside the EU, it’s the purchase price or market value.
- Tax Credit: Italy allows for the deduction of property tax already paid in the country where the property is located to avoid double taxation.
- Minimum Threshold: The tax is not due if the calculated annual amount is less than or equal to €200.
If you’re more interested in the fiscal aspects of transactions in Italy, you can read our detailed article on taxes when buying a property in Italy.
Comparative Analysis: Spain vs. Italy (2025)
| Criterion | Wealth Tax (Spain) | IVIE Tax (Italy) |
| Who Pays? | Residents (on worldwide assets) and non-residents (on Spanish assets). | Only tax residents of Italy. |
| What is Taxed? | The net value of all assets (properties, bank accounts, investments). | Only the value of real estate outside of Italy. |
| Tax-Free Threshold | €700,000 (national), but varies by region. Additional state ITSGF over €3 million. | No threshold, but waived if the amount is ≤ €200. |
| Tax Rate | Progressive, 0.2% – 3.5% (varies by region). | Fixed, 1.06%. |
Conclusion: Which Tax Is More Likely to Affect You?
The choice between the two jurisdictions depends entirely on your profile and the value of your assets.
- The Wealth Tax in Spain is relevant to you if you are a non-resident with property or other assets valued over €700,000 (or a lower regional threshold). Even in regions with reliefs like Madrid, if your wealth exceeds €3 million, you will be subject to the state’s Solidarity Tax.
- The IVIE tax in Italy will only affect you if you become a tax resident of Italy and own properties in other countries. It does not affect foreign investors who simply buy a holiday home in Italy.
Before any investment, it is highly recommended to consult with a tax expert familiar with international and local legislation.
This post is also available in: Български
