New Developments in Form 718 for the Wealth Solidarity Tax: Application of the Tax Liability Limit to Non-Resident Taxpayers

The Temporary Solidarity Tax on Large Fortunes (ITSGF) introduces significant developments in the tax campaign corresponding to fiscal year 2025 following the publication in the Spanish Official State Gazette (BOE) of Order HAC/652/2026, of 26 June, which amends Form 718 in order to adapt it to the latest judicial and administrative criteria.

The amendment incorporates the doctrine established by the Spanish Supreme Court and the Central Economic-Administrative Tribunal (TEAC) regarding the application of the gross tax liability limit to taxpayers subject to the tax under limited tax liability, eliminating the existing difference in treatment compared with taxpayers subject to unlimited tax liability.

In practice, this change particularly affects non-resident taxpayers with assets located in Spain, who will be able to apply the joint tax liability limit of the Temporary Solidarity Tax on Large Fortunes under the terms established by the applicable regulations.

The Temporary Solidarity Tax on Large Fortunes is a state tax that applies to the net wealth of individuals when it exceeds certain thresholds.

Its regulation is closely linked to the Wealth Tax, as it relies on its rules for essential aspects such as determining the taxable base, valuing assets and rights, and applying certain exemptions.

The tax has been subject to debate since its approval, particularly due to its interaction with the powers of Spain’s autonomous regions regarding Wealth Tax. However, the Spanish Constitutional Court confirmed its constitutionality, meaning that it continues to apply to taxpayers who meet the legally established requirements.

The ITSGF applies both to taxpayers subject to unlimited tax liability, mainly Spanish tax residents who are taxed on their worldwide wealth, and to those subject to limited tax liability, generally non-residents who are taxed on certain assets and rights located or exercisable in Spanish territory.

The declaration of the Temporary Solidarity Tax on Large Fortunes corresponding to fiscal year 2025 must be submitted using Form 718.

Individuals whose net wealth exceeds the limits established by the regulations and whose tax liability, after applying the corresponding deductions and allowances, results in an amount payable, are required to file the return.

Therefore, exceeding a certain level of wealth does not automatically trigger the obligation to file Form 718. It is necessary to analyse the final result of the tax assessment.

The tax provides for a tax-free allowance of EUR 700,000, applicable to both taxpayers subject to unlimited tax liability and those subject to limited tax liability. In practice, the analysis of this tax becomes particularly relevant for wealth exceeding EUR 3,700,000, without prejudice to the need to assess each specific situation according to the composition of the assets and the taxpayer’s tax residence.

The filing period for Form 718 corresponding to fiscal year 2025 runs from 1 July to 31 July 2026.

Where taxpayers choose direct debit payment for the amount due, the return must be submitted within the specific deadline established for this payment method.

The tax return must be filed electronically through the online platform of the Spanish Tax Agency.

The taxable base of the ITSGF is determined by reference to the rules established for Wealth Tax.

As a general rule, it is calculated as the difference between the value of the taxpayer’s assets and rights and any charges, encumbrances, debts or obligations that may be deductible under the applicable regulations.

In this regard, it is essential to properly analyse aspects such as the nature of the assets, direct or indirect ownership, the tax valuation of real estate assets or company shares, the taxpayer’s tax residence and the existence of assets located across different jurisdictions.

The Temporary Solidarity Tax on Large Fortunes and Wealth Tax are directly connected, as both taxes apply to the net wealth of individuals.

To prevent effective double taxation, ITSGF regulations allow taxpayers to deduct the amount effectively paid under Wealth Tax for the same fiscal year.

As a result of this relationship, the impact of the Wealth Solidarity Tax is particularly significant in those territories where differences exist between regional Wealth Tax rules and the state taxation resulting from the ITSGF.

One of the most relevant aspects of the tax is the so-called gross tax liability limit.

The regulations establish that the sum of the gross liabilities arising from Personal Income Tax (IRPF), Wealth Tax and the Temporary Solidarity Tax on Large Fortunes cannot exceed certain limits in relation to the taxpayer’s Personal Income Tax taxable base.

Where this threshold is exceeded, the ITSGF liability may be reduced in accordance with the legally established rules.

This mechanism seeks to prevent the combined taxation of income and wealth from reaching disproportionate levels in relation to the economic capacity reflected by the income obtained.

The amendment to Form 718 originates from the doctrine established by the Spanish Supreme Court in relation to Wealth Tax.

In judgments No. 1372/2025, of 29 October, and No. 1402/2025, of 3 November 2025, the Supreme Court concluded that habitual residence in Spain or abroad cannot, by itself, justify different treatment between resident and non-resident taxpayers.

The Supreme Court considered the exclusion of taxpayers subject to Wealth Tax under limited tax liability from the limit provided for in Article 31.1 of Law 19/1991 to be unjustified.

Consequently, non-resident taxpayers may also benefit from the joint tax liability limit when the requirements established by the regulations are met.

Following the doctrine established in relation to Wealth Tax, the Central Economic-Administrative Tribunal extended this criterion to the Temporary Solidarity Tax on Large Fortunes.

The TEAC concluded that the tax liability limit provided for under the ITSGF regulations must apply both to taxpayers subject to unlimited tax liability and to those subject to limited tax liability.

This criterion is binding on the Spanish Tax Administration, which made it necessary to adapt Form 718 to reflect the new interpretation.

Order HAC/652/2026, of 26 June, amends Order HFP/587/2023, of 9 June, which originally approved Form 718 for the Temporary Solidarity Tax on Large Fortunes.

The amendment replaces the annex of the form in order to adapt it to the doctrine established by the Supreme Court and the TEAC, removing the restriction that limited the application of the tax liability limit exclusively to taxpayers subject to unlimited tax liability.

The update will apply for the first time to Form 718 returns corresponding to fiscal year 2025.

The main practical consequence of this amendment is that non-resident taxpayers holding assets and rights located in Spain will be able to assess the application of the joint tax liability limit under the same conditions as resident taxpayers.

This issue may be particularly relevant for international investors, owners of real estate in Spain, entrepreneurs with international corporate structures or families with wealth distributed across several jurisdictions.

The correct application of the ITSGF requires reviewing not only the value of the assets, but also tax residence, the nature of the assets, the possible application of exemptions and the interaction with other taxes.

The new developments introduced in Form 718 reinforce the importance of analysing wealth taxation from a global perspective, particularly in situations involving international elements.

At ILIA ETL GLOBAL, we advise high-net-worth individuals, entrepreneurs, investors and non-resident taxpayers on national and international tax planning, as well as compliance with their tax obligations in Spain.