In the Spanish tax system, double taxation of wealth has become a highly relevant issue since the creation of the Temporary Solidarity Tax on Large Fortunes (ITSGF).
This new tax complements the traditional Wealth Tax (IP) and has generated numerous questions among taxpayers.
In this article, we explain how both taxes work, the differences between autonomous communities, and how we can help you optimize your tax planning.
What is the Temporary Solidarity Tax on Large Fortunes (ITSGF)?
The ITSGF was approved at the end of 2022 on a temporary basis, applying to the 2022 and 2023 fiscal years, although its continuation remains open to review.
Its main objective was twofold:
1. Increase revenue in times of uncertainty
The State sought to generate additional revenue in a context of economic crisis, inflation, and budgetary strain.
2. Harmonize the taxation of large fortunes
The ITSGF aims to prevent large fortunes in some autonomous communities — such as Madrid or Andalusia — from being exempt from taxation thanks to regional bonuses of 100% in the Wealth Tax.
Double taxation between IP and ITSGF: myth or reality?
Although both tax the net wealth of taxpayers, the law provides mechanisms to avoid effective double taxation.
The ITSGF as a complement to the Wealth Tax
The ITSGF allows you to deduct the amount already paid for Wealth Tax in the corresponding autonomous community.
In practice:
- If the community applies a high IP → the ITSGF is reduced or cancelled.
- If the community provides a 100% discount on IP → the State collects the full amount of ITSGF.
Minimum tax harmonization
The design seeks to balance territorial differences, ensuring that large fortunes contribute homogeneously, regardless of regional tax policy.
Practical application example
- In Madrid or Andalusia: subsidized IP, the ITSGF is paid in full to the State.
- In the Balearic Islands or Valencia: IP with its own rates, the ITSGF only covers the difference.
Taxation differences by Autonomous Community
The following comparison summarizes how double taxation affects wealth according to regional regulations:
Madrid and Andalusia
- 100% IP Bonus.
- The taxpayer only pays the ITSGF.
- The revenue goes to the State.
Balearic Islands and Valencia
- It applies its own rates and deductions.
- The taxpayer pays both IP and ITSGF (partially).
- The revenue is divided between the community and the State.
Numerical example
For a net worth of 5 million euros, with a minimum exemption of 700,000 euros and an ITSGF fee of 60,000 euros:
- In Madrid or Andalusia: subsidized IP → €60,000 is paid to the State.
- In the Balearic Islands or Valencia: Regional IP of €55,000 → only an additional €5,000 is paid to the State.
ITSGF and IP: examples of taxation in different Autonomous Communities
The difference in the taxation of large fortunes lies precisely in how the deduction of the IP quota is applied in the ITSGF.
| Autonomous Community | IP Regulation (Base) | IP Quota | Pay ITSGF Supplement | Total Revenue |
|---|---|---|---|---|
| Madrid | 100% discount on the fee | 0 € | Full ITSGF Fee | Full ITSGF Fee (for the State) |
| Andalusia | 100% discount on the fee | 0 € | Full ITSGF Fee | Full ITSGF Fee (for the State) |
| Balearics | It applies its own rates and bonuses (it is taxed) | > 0 € | ITSGF Fee – IP Fee | IP Fee + ITSGF Fee (Harmonized) |
| Valencia | It applies its own rates and bonuses (it is taxed) | > 0 € | ITSGF Fee – IP Fee | IP Fee + ITSGF Fee (Harmonized) |
Conclusion: a covert tax harmonization
The ITSGF does not replace the Wealth Tax, but rather complements it to ensure that large fortunes contribute equitably throughout the country.
While Madrid and Andalusia transfer their revenue to the central government, the Balearic Islands and Valencia maintain a balance with their own Wealth Tax.
In short, the current system aims for minimal tax harmonization rather than effective double taxation.
Do you have questions about how the ITSGF affects you in the Balearic Islands?
At Resitax, we are a tax consultancy in Mallorca specializing in wealth planning, taxes and tax saving strategies for individuals and companies.