Wealth planning in Mallorca: what a foreign resident or non-resident should review

Anyone with a home, investments or family in Mallorca and a foreign nationality faces several sets of rules at once: Spanish law, that of their country of origin and, where applicable, a treaty between the two. This guide summarises what should be reviewed in order to organise one’s assets, under the rules in force on 27 October 2026. It does not promise tax savings: it points out matters that must be checked case by case.

1. Tax residence determines almost everything else

Article 9.1 of the Personal Income Tax Law 35/2006 (IRPF) considers a person resident in Spain if either of these circumstances applies:

• They spend more than 183 days in Spanish territory during the calendar year. Sporadic absences are counted, unless tax residence in another country is proven.
• The main base or centre of their activities or economic interests is in Spain, directly or indirectly.

In addition, unless proven otherwise, the taxpayer is presumed to be resident when, under those criteria, their spouse (not legally separated) and dependent minor children habitually reside in Spain. The 183 days are therefore not the only criterion.

This question comes first because other taxes refer to the same rules: Wealth Tax (Art. 5.Dos of Law 19/1991), Inheritance and Gift Tax (Art. 6.2 of Law 29/1987) and Non-Resident Income Tax (IRNR) (Art. 6). A resident is an IRPF taxpayer, taxed on their income wherever it arises (Arts. 2 and 8.1.a of Law 35/2006), and is taxed on a worldwide basis in Wealth Tax and in Inheritance Tax. A non-resident is taxed on a limited basis, only on what is located or exercisable in Spain.

2. IRPF or IRNR, and the treaties with Germany and the United Kingdom

The consolidated text of the IRNR Law (Royal Legislative Decree 5/2004) taxes non-residents on income obtained in Spanish territory (Arts. 5 and 13), such as income from property, imputed income from urban property and capital gains arising from it. Under Article 25.1, the general rate is 24%, and 19% for residents of another EU or EEA State with effective exchange of information; dividends, interest and capital gains are taxed at 19%. Only those residents may deduct expenses linked to the income obtained in Spain (Art. 24.6); in other cases the base is the gross amount (Art. 24.1). The United Kingdom is no longer a Member State of the EU.

The treaties in force are:

• Germany: Convention of 3 February 2011 and its Protocol (Spanish Official State Gazette (BOE) of 30 July 2012), which replaces the one of 1966.
• United Kingdom: Convention of 14 March 2013 and its Protocol (BOE of 15 May 2014), which replaces the one of 1975.

Both include Wealth Tax among the taxes covered (Art. 2). They allow the State where the property is located to tax its income (Art. 6), the gains on its sale (Art. 13) and its value as wealth (Art. 21), and require the State of residence to eliminate double taxation (Art. 22). If a person is resident in both States, Article 4.2 applies, in this order, the permanent home, the centre of vital interests, habitual abode and nationality. Their list of taxes does not include Inheritance and Gift Tax. The BOE warns that the multilateral BEPS Convention may have affected their provisions.

3. Wealth Tax

• Residents: taxed on their entire net wealth (Art. 5.Uno.a of Law 19/1991).
• Non-residents: taxed on assets and rights located or exercisable in Spain, including holdings in unlisted entities whose assets are at least 50% property located in Spain (Art. 5.Uno.b). The fourth additional provision recognises their right to apply the rules of the region where the greatest value of their assets in Spain is located.
• Tax-free allowance: €700,000 if the autonomous region does not regulate it (Art. 28.Dos). In the Balearic Islands it is €3,000,000 (Art. 8 of Legislative Decree 1/2014, under Law 12/2023), which non-residents opting for the Balearic rules can also apply; to do so they must always file form 714, even if no tax is payable.

We analyse this in Wealth Tax in the Balearic Islands for non-residents and in the combined limit with IRPF.

Large estates must also consider the Temporary Solidarity Tax on Large Fortunes (Art. 3 of Law 38/2022), which taxes net wealth above €3,000,000 (with a €700,000 tax-free allowance and a 0% rate on the first €3,000,000 of taxable base, so that in practice it is only paid from net wealth of around €3,700,000) and was extended by Royal Decree-law 8/2023 (fifth additional provision).

4. Inheritance and Gift Tax

A resident is taxed on everything they receive, wherever it is (Art. 6.1 of Law 29/1987); a non-resident, on assets located, exercisable or enforceable in Spain (Art. 7). The second additional provision recognises the right of non-residents to apply regional rules in these cases:

• Inheritance from a non-resident deceased person: that of the region where the greatest value of the assets located in Spain is; if there are no assets in Spain, that of the region where the heir resides.
• Inheritance from a deceased person resident in a region: that of that region.
• Donation of property located in Spain: that of the region where it is located.

In these cases the tax is filed with the Spanish Tax Agency (form 650), and the taxpayer may choose between the State rules and the regional rules. Since 25 July 2025 the Balearic rebates no longer require unlimited tax liability, so non-residents who opt for the Balearic rules can also apply them. Balearic reliefs have changed in recent years: see inheritance and gift tax relief in the Balearic Islands and our guide to Inheritance Tax in the Balearic Islands 2026.

5. Assets abroad: form 720

The obligation to report accounts, securities, insurance, income and property located abroad is in the eighteenth additional provision of the General Tax Act, developed by Articles 42 bis, 42 ter, 42 quater and 54 bis of Royal Decree 1065/2007. These articles apply to persons resident in Spanish territory and to permanent establishments in Spain.

The judgment of the Court of Justice of the EU of 27 January 2022 (Case C-788/19, Commission v Spain) held that the consequences of non-compliance infringed the free movement of capital: the reassessment without any limitation period, the proportional fine and the fixed fines per item of data (the Court’s press release).

Law 5/2022 of 9 March kept the reporting obligation with a new wording of the eighteenth additional provision, repealed the first and second additional provisions of Law 7/2012 (the penalty regime and the attribution of unjustified gains) and amended Article 39 of the IRPF Law, which no longer contains the special rule for those who did not declare these assets. Following Law 5/2022, the general regime of infringements and penalties of the General Tax Act (Arts. 198 and 199) applies, as the Spanish Tax Agency indicates; the fixed fines per item of data of the previous regulation and the proportional fine of 150% disappeared.

Current regime for the return:

• There is no obligation to report a category when its values do not jointly exceed €50,000 (for accounts, the balance at 31 December and the average balance of the last quarter are compared); if they are exceeded, all the assets in the category are reported.
• The deadline is from 1 January to 31 March of the following year. In later years it is only repeated if the joint value increases by more than €20,000 or if assets already declared were cancelled or transferred.
• Virtual currencies have their own obligation (Art. 42 quater).

6. Property in Mallorca: obligations of the non-resident owner

• Letting: taxed in the IRNR (Art. 13.1.g). The base and rate depend on the owner’s place of residence (see section 2).
• Property not let: gives rise to imputed income (Arts. 13.1.h and 24.5), calculated under Article 85 of the IRPF Law using a percentage of the cadastral value. Royal Decree-law 29/2026 of 6 October, in force since 8 October and pending validation as of 27 October 2026, provides that from 1 January 2027 a scale by bands from 1.1% to 3% will apply to the sum of cadastral values; if it were not validated, that provision would lapse.
• Return: form 210 (Order EHA/3316/2010). For imputed income for 2026 and later years, the Spanish Tax Agency indicates a deadline from 1 April to 31 December of the following year, under Order HAC/623/2026. The other deadlines are on the electronic office.
• Sale: the gain is taxed in the IRNR (Art. 13.1.i.3.º). The buyer must withhold and pay 3% of the consideration as a payment on account (Art. 25.2), using form 211.
• Representative: the tax authorities may require someone who is not resident in the EU or, under the legal terms, in the EEA to have a representative in Spain for owning a property (Art. 10.1).
• Purchase: see Transfer tax in the Balearic Islands: housing and incentives.

7. Wills and the law applicable to succession

Regulation (EU) 650/2012 applies to the succession of those who die on or after 17 August 2015 (Arts. 83 and 84):

• The law applicable to the whole succession is that of the State of the deceased’s habitual residence at death (Art. 21.1), unless there is a manifestly closer connection with another State (Art. 21.2).
• Anyone may choose the law of the State whose nationality they hold at the time of choosing or at death, expressly in a disposition upon death or resulting from its terms (Art. 22).
• The designated law applies even if it is not that of a Member State (Art. 20). The United Kingdom did not take part in the adoption of the Regulation (recital 82), but its law may apply if the Regulation designates it.

If the applicable law is Spanish, Article 36 refers to the internal rules to determine the territorial civil law; in the Balearic Islands, there is its own civil law (Legislative Decree 79/1990). Wills in each country should be reviewed and checked to make sure they are consistent with each other.

8. Those arriving in Mallorca or leaving

Arrival. On acquiring residence, one becomes taxed on a worldwide basis. There is an optional regime for posted workers (Art. 93 of the IRPF Law), which requires not having been resident in the previous five periods and a move for specified reasons, such as an employment contract; it applies in the year of the change and the following five, and whoever opts for it is taxed in Wealth Tax on a limited basis.

Departure. Article 95 bis of the IRPF Law may treat as a capital gain the positive difference between the market value and the acquisition value of shares or holdings. It only applies if the person was a taxpayer in at least ten of the previous fifteen periods and the combined market value exceeds €4,000,000 or, otherwise, the holding in an entity exceeds 25% and its value exceeds €1,000,000. Assets located in Spain will remain subject to tax as a non-resident.

Review checklist

1. Count the days of presence and document economic interests and family situation.
2. Check the State of residence and the applicable treaty.
3. Inventory assets by country and type, with their value at 31 December.
4. Calculate Wealth Tax and, if applicable, the Large Fortunes tax.
5. Review form 210 for properties, the representative and the form 720 obligation.
6. Review wills and decide whether it is advisable to choose the national law.
7. If there is a family business, study its structure (family holding company).

Frequently asked questions

Am I tax resident if I spend fewer than 183 days in Mallorca?

You may be. Article 9.1 of the IRPF Law also looks at the main base or centre of your economic interests, and presumes residence when your spouse (not separated) and dependent minor children live in Spain.

Must a non-resident file form 720?

Articles 42 bis, 42 ter and 54 bis of Royal Decree 1065/2007 apply to persons resident in Spanish territory and to permanent establishments in Spain. On acquiring residence, the obligation should be assessed.

Can I choose the law applicable to my inheritance?

Yes, that of the State of your nationality, expressly in a disposition upon death (Art. 22 of Regulation 650/2012). Without a choice, the law of the habitual residence at death applies.

How we work at Vicens Advisors

At Vicens Advisors we start from an inventory of assets, residences and succession documents and review each point on the list against the rules that apply to your case. We provide tax advice in Manacor to residents and non-residents with assets in Mallorca.

LEGAL NOTICE

This content is provided for information purposes and does not constitute tax or legal advice. It is based on the legislation and the criteria cited, in force at the date of publication. Regional legislation and treaties may change some of the requirements described. Each situation requires a specific analysis.

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