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Wealth Tax on Property Purchases

Wealth Tax in Mallorca 2026: Allowances, Rates and Planning

Speak to our team about your individual wealth tax situation:

Spanish Wealth Tax (Impuesto sobre el Patrimonio) — the basics

Since its reintroduction in 2011, Spain has levied a wealth tax on the worldwide assets of natural persons. The 2021 tax reform removed its originally temporary character — the levy has been permanent ever since. The reference date is 31 December each year: what counts is the wealth you hold on that date.

Companies and corporations are not subject to wealth tax. It applies exclusively to natural persons — both Spanish tax residents (on their worldwide assets) and non-residents (only on assets located in Spain, i.e. typically the Mallorca property).

Balearic allowance of €3 million since 2024 — the key change

The most important update for Mallorca owners and buyers: under the Balearic Budget Law No. 12/2023, the personal allowance for persons tax-resident in the Balearic Islands was raised from €700,000 to €3,000,000 per person with effect from 1 January 2024.

Consequence: anyone with their primary residence in Mallorca who holds assets below €3 million (plus a €300,000 main-home allowance) no longer pays any wealth tax. For married couples with combined assets, the threshold can effectively rise to around €6.6 million — as each person is entitled to their own allowance individually.

This increase aligns numerically with the threshold above which the national solidarity surcharge (Impuesto Temporal de Solidaridad de las Grandes Fortunas) applies. The solidarity tax was extended by Law 8/2023 of 27 December 2023 and affects assets exceeding €3 million at federal level. Effect: the Balearic increase neutralises the regional tax up to the national threshold — beyond that, the federal solidarity mechanism kicks in.

Non-residents — national allowance and election right

For buyers who are not tax-resident (typically from Germany, Austria, Switzerland or other EU countries), the national allowance of €700,000 traditionally applied — without the €300,000 main-home component, as the Spanish property does not constitute their primary residence.

Important since 2015: Non-residents may choose whether to be taxed under the national schedule or under the schedule of the Autonomous Community in which the majority of their Spanish assets are located. For buyers on Mallorca, this means: you can opt for the Balearic €3 million allowance provided your property is on Mallorca. This election must be made actively in the tax return and is usually considerably more favourable than the national default.

Rates and tax burden — what is the actual tax?

Wealth tax is levied on a progressive scale. In the Balearic Islands, the highest rate is 3.45% per annum on assets beyond approximately €10.7 million. The lower rate bands start at 0.28% for the first hundreds of thousands above the allowance and rise incrementally.

Worked example: non-resident with a €5,000,000 Mallorca property (Balearic schedule elected)

  • Gross assets: €5,000,000
  • Less Balearic allowance: −€3,000,000
  • Taxable base: €2,000,000
  • Wealth tax (Balearic progressive scale, lower bands): approx. €8,000 – €12,000 per year

Without the Balearic allowance (i.e. under the national schedule with its €700,000 allowance), the same €5,000,000 would attract considerably more tax — in the region of €25,000 – €40,000 per year.

Filing obligation — even when no tax is payable

A wealth tax return must be filed if either a tax liability arises or gross assets exceed €2,000,000 — even if no payment is due after deducting liabilities or allowances. This threshold has remained unchanged for years and was not adjusted when the allowances were raised.

In practice this means: anyone who owns a Mallorca property worth more than €2,000,000 must file a return, even if they owe no wealth tax thanks to the €3,000,000 allowance.

Beckham Law for new residents

Skilled workers or self-employed individuals who relocate to Spain may, under certain conditions, be eligible for the Beckham régimen (Régimen Especial Trabajadores Desplazados, RETD). Under this special regime, wealth — as with non-residents — is taxed only on assets situated in Spain, and the top income tax rate on Spanish-sourced income is 24% on the first €600,000.

For wealth tax purposes during the Beckham Law period, the national schedule applies with a €700,000 allowance (or, depending on the residency election, the Balearic schedule). The precise election mechanism should be reviewed with a tax adviser specialising in Mallorca, as the Beckham Law has complex interactions with regional wealth tax.

Planning opportunities — how wealth tax can be optimised

Several levers are relevant in practice:

  • Key-date planning: Anyone who buys at the end of December pays for the whole year — anyone who sells before 31 December saves a year's tax.
  • Multiple owners: High-value properties can be acquired by several individuals in proportion. Because of the individual allowances and the progressive rate structure, the overall tax burden falls considerably.
  • Loans: Mortgage interest can — provided it falls below the wealth tax saved — create a useful leverage effect.
  • Property holding companies: Ownership via a holding structure is possible, but has complex interactions both in Spain and in the country of origin (withholding tax, CFC rules). Only advisable with bilateral tax advice.
  • Change of residence: Anyone who registers their primary residence in Mallorca benefits from the Balearic tax rate and the 3 million euro allowance — but triggers additional tax obligations (income tax on worldwide assets).

Regional differences across Spain — a comparison

Wealth tax regulations vary considerably between the autonomous communities:

  • Balearic Islands (Mallorca, Ibiza): €3 million allowance since 2024 (Gesetz 12/2023)
  • Madrid: 100% tax credit — wealth tax effectively abolished
  • Andalusia: 100% tax credit since 2023 — likewise abolished
  • Valencia (Comunitat Valenciana): Allowance increased to €1 million from tax year 2025
  • Catalonia: €500,000 allowance (regional), €700,000 for non-residents
  • Canary Islands: still €700,000 — tourist rental activity can lead to exemption

With its €3 million allowance, Mallorca sits at the attractive top end of the regions that still levy wealth tax, when compared across Spain.

Double taxation agreements — who has the right to tax?

Before Spain may tax at all, the double taxation agreement (DBA) between Spain and the country of residence must permit it. The Germany–Spain DBA (Art. 9 and 25 of the Spanish Wealth Tax Act) provides that assets located in Spain (in particular real estate) are taxed in the state of location — i.e. in Spain. For German non-residents, the Mallorca property is therefore subject to Spanish wealth tax even when their centre of life is in Germany.

Frequently asked questions about wealth tax in Mallorca

Do I really have to pay wealth tax as a German buyer in Mallorca?
Yes, in principle you do — Spain has the right to tax property located in Spain. With the Balearic allowance of €3 million (which you can elect as a non-resident), the tax liability on properties below €3 million is effectively zero. You must still file a return if your gross assets in Spain exceed €2 million.
When does it make sense to switch to the Balearic rate table as a non-resident?
Almost always for properties above €700,000. The national table provides only a €700,000 allowance, whereas the Balearic table offers €3 million. On a €2 million property you would be fully taxed under the national table (approx. €7,000–€12,000 p.a.), but pay nothing under the Balearic table. The election must be made actively in the return.
What happens with assets above €3 million?
In that case both the regional Balearic table (on the portion above the allowance) and, where applicable, the national solidarity surcharge apply. The two mechanisms are largely coordinated so that double taxation does not arise — the solidarity mechanism credits the regional wealth tax already paid.
Does the €300,000 primary residence allowance apply to me as well?
Only for residents — that is, individuals whose principal tax residence is actually in Mallorca. Non-residents are not entitled to this additional primary residence allowance, because the Mallorca property is not their main residence for tax purposes.
How is the property value assessed for wealth tax purposes?
Since 2022, the reference value in many cases is the "market reference value" (Valor de Referencia), calculated by the tax authorities. Alternatively, the cadastral value, the acquisition cost, or the market value may be used — whichever is highest. In recent years this has led to de facto tax increases.
Is it worth buying property through a company to avoid wealth tax?
Rarely. Spain introduced a real-estate company clause in 2023 that produces look-through effects at least for Spanish holding structures. In addition, German exit-tax and CFC rules may apply. A holding structure must always be examined from both sides (Spain and the home country) and only becomes worthwhile for larger asset portfolios.

Note: This article provides a general overview of wealth tax in the Balearic Islands (as of 2026) and does not replace individual tax advice. For your specific situation, we recommend consulting a tax adviser specialising in Mallorca tax law.