Spanish Wealth Tax: 2025 TEAC Decision on the Regional Regime for Non-Residents

The TEAC Decision on the Regional Regime — The Short Answer

On 24 September 2025, Spain's Central Economic-Administrative Tribunal (Tribunal Económico-Administrativo Central, TEAC) ruled in its Resolution RG 2959/2023 that non-residents tax-resident in third countries (outside the EU/EEA) can also rely on the regional (autonomous community) regime for Wealth Tax purposes — including for still-open tax years before 2021. For owners of property in the Balearic Islands, this can mean significant refund claims, since the Balearic allowance (€3,000,000) is considerably higher than the state allowance (€700,000) — provided the relevant year is not yet time-barred.

The Legal Background: Why This Question Was Contested at All

Spanish Wealth Tax is a devolved, regionalised tax (impuesto cedido). Each autonomous community can set its own allowances, tax rates, and reliefs. For taxpayers with unlimited tax liability (residents), the applicable regime is clear — it depends on where in Spain they live.

For non-residents (taxed under obligación real, i.e. only on assets located in Spain), it was long unclear whether and how they could benefit from regional reliefs — after all, they have no residence in a specific autonomous community.

The legislative development:

Timing	Legal basis	Who could elect the regional regime?
Until 2014	—	Generally not available to non-residents
From 2015	Ley 26/2014 (Fourth Additional Provision, LIP)	Only EU/EEA residents (UK included until 31.12.2020 due to the Brexit transition period)
From tax year 2021	Ley 11/2021, in force since 11.07.2021	All non-residents, regardless of country of residence

The 2021 legislative change was a direct response to a CJEU ruling in the area of inheritance and gift tax (Case C-127/12, ruling of 03.09.2014), which classified a comparable restriction to EU/EEA residents as a breach of the free movement of capital (Art. 63 TFEU).

The Open Question: What Applied to Years Before 2021?

This is where the TEAC decision comes in. Until 2024, the TEAC itself maintained a restrictive position: in earlier resolutions dated 12 December 2024, the tribunal had still rejected the application of the regional regime for third-country non-residents in comparable older cases — on the grounds that the 2021 law did not apply retroactively.

What changed on 24.09.2025?

In Resolution RG 2959/2023, the TEAC expressly abandoned its own prior position ("cambio de criterio"). The tribunal found that:

• The 2014 CJEU ruling on inheritance/gift tax is, according to consistent Spanish case law (including the High Court of Justice of the Basque Country, 14.11.2022; TSJ Asturias, 07.02.2025; TSJ Balearic Islands, 01.02.2023 and 28.06.2023), directly transferable to Wealth Tax as well
• Since the free movement of capital, as directly applicable EU law, was already in force before the 2021 Spanish legislative change, equal treatment of third-country non-residents should already have applied in earlier tax years
• The restrictive interpretation of the old version of the Fourth Additional Provision of the LIP (before the amendment by Ley 11/2021) is therefore inapplicable to the extent it breaches EU law

The specific case: A taxpayer not resident in Spain had self-assessed Wealth Tax for 2020 under the state regime and paid €23,250.65. They applied for a correction in order to apply the regional regime with a 100% rebate instead — which was initially refused by the AEAT and at first instance. The TEAC has now ruled in their favour. Note: this case concerned a region with a full rebate (such as Madrid). In the Balearic Islands, the advantage of the regional regime lies not in a rebate but in the significantly higher allowance (€3,000,000 instead of €700,000) — however, the underlying legal principle (the right to elect the regional regime) is identical.

What Does the "Binding Effect" of a TEAC Decision Mean?

Important for the legal classification: a TEAC resolution is not legislation and does not carry the same weight as a ruling of the Supreme Court. However, it is binding on the Spanish tax administration (AEAT) — meaning the AEAT must apply this legal position in comparable cases, without every individual case having to be brought before a court again.

This distinguishes the TEAC decision from the parallel Supreme Court rulings on the "Límite Conjunto" (see our guide on the Wealth Tax cap) — both legal developments improve the position of non-residents but rest on different instances and legal grounds. However, the binding effect does not mean that every application will automatically succeed: limitation periods, evidence, residence, and the specific applicable autonomous community must still be assessed on a case-by-case basis.

Who Does This Specifically Affect?

This decision specifically affects:

• Non-residents tax-resident in genuine third countries (e.g. Switzerland, the USA, Canada, Australia) — for this group, the right to elect was genuinely disputed before 2021
• UK residents require separate assessment: due to the Brexit transition period (until 31.12.2020), the UK was treated by the EU largely as a member state until the end of 2020. UK residents therefore already had the right to elect the regional regime for years up to and including 2020 via Ley 26/2014 (the EU/EEA regime) — not only through this TEAC decision. The TEAC ruling becomes relevant for UK residents primarily where the AEAT wrongly denied them this right for years before 2021
• Those with assets in an autonomous community with a more favourable regional regime than the state default — the Balearic Islands, with their €3,000,000 allowance, are a particularly relevant example
• For tax years before 2021 that are not yet time-barred

The decision is not relevant for:

• EU/EEA residents and UK residents for years up to 2020 — they already had the right to elect since 2015 or during the Brexit transition period
• Tax years from 2021 onwards — here the right to elect already applied under Ley 11/2021, independently of this TEAC decision

Practical Steps: Applying for a Refund

Non-residents from third countries who paid Wealth Tax under the less favourable state regime for a year before 2021 can apply for a correction of their self-assessment (rectificación de autoliquidación).

Important condition — limitation period: the right to request a correction generally lapses four years after the end of the relevant filing deadline. The TEAC ruling of 24.09.2025 does not reopen years that are already time-barred — it only helps where proceedings are still open or the limitation period was interrupted in time.

Tax year	Regular filing deadline	Regular limitation expiry	Status as of September 2025
2018	Summer 2019	Summer 2023	Generally already time-barred, unless interrupted
2019	Summer 2020	Summer 2024	Generally already time-barred, unless interrupted
2020	30.06.2021	30.06.2025	Critical — generally already time-barred before the TEAC ruling, unless a limitation-interrupting application was filed in time

For older years such as 2018–2020, an application is therefore only viable if the relevant year is not yet time-barred, or the limitation period was interrupted by earlier applications or administrative acts. Since the regular limitation period for 2020 already ended on 30.06.2025 — before the TEAC decision of 24.09.2025 — this year is, for most affected taxpayers without a prior interrupting act, already time-barred. The TEAC ruling is therefore not a retroactive free pass for expired tax years, but primarily helps in cases with still-pending proceedings (e.g. pending appeals) or a timely interrupted limitation period. A prompt, individual review by a specialised tax adviser is essential here.

Interaction with the Supreme Court Ruling on the "Límite Conjunto"

This TEAC decision sits alongside a second, independent legal development from the same period: the Supreme Court rulings of 29.10.2025 and 03.11.2025, which also grant non-residents access to the so-called "Límite Conjunto" (the 60% cap on combined income tax and Wealth Tax liability).

Both developments can combine in certain cases: a third-country non-resident who could benefit both from correctly applying the regional regime and from the "Límite Conjunto" should have both aspects reviewed in any correction application.

FAQ

I am tax-resident in a third country and have owned property in Mallorca since before 2021 — does this affect me? Possibly, if you are tax-resident in a genuine third country such as Switzerland, the USA, Canada, or Australia. If you paid Wealth Tax under the state regime (€700,000 allowance) instead of the Balearic regime (€3,000,000 allowance) for years before 2021, a refund claim may exist — provided the relevant year is not yet time-barred. Individual review is necessary.

I am tax-resident in the UK — does this affect me? For years up to and including 2020, you were still treated as an EU resident for tax purposes due to the Brexit transition period, and already had the right to elect the regional regime via Ley 26/2014 — not only through this TEAC decision. The ruling becomes relevant for you primarily if the AEAT wrongly denied you this right for years before 2021. For years from 2021 onwards, the general right to elect under Ley 11/2021 applies in any case.

Do I need to do anything as an EU citizen? No, this specific TEAC decision concerns third-country residents. EU/EEA residents have had the right to elect the regional regime since 2015.

What happens if I applied the state regime for 2021 or later, even though I was entitled to the regional regime? A correction can generally be requested here too — but this does not concern the TEAC decision itself, rather the application of the right to elect that has applied since 2021 under Ley 11/2021.

Is a TEAC decision the same as a law? No. A TEAC resolution binds the tax administration (AEAT) but does not carry the same weight as legislation or a Supreme Court ruling. It does not change the wording of the law but corrects how the administration applies it.

How much time do I have to file an application? Generally four years from the end of the relevant filing deadline for the affected tax year. For older years (particularly 2018–2020), the deadline may already have passed — prompt individual review is recommended.

Sources

• TEAC, Resolution of 24.09.2025, RG 2959/2023
• TEAC, earlier resolutions of 12.12.2024 on the abandoned position, referenced within RG 2959/2023
• Ley 19/1991 (Spanish Wealth Tax Act), Fourth Additional Provision
• Ley 26/2014 (introduced the right to elect for EU/EEA residents)
• Ley 11/2021 (extended the right to elect to all non-residents from 2021)
• CJEU, ruling of 03.09.2014, Case C-127/12, ECLI:EU:C:2014:2130
• TSJ Balearic Islands, rulings of 01.02.2023 and 28.06.2023
• TSJ Basque Country, ruling of 14.11.2022
• TSJ Asturias, ruling of 07.02.2025

Conclusion

The TEAC decision of September 2025 closes an important gap for non-residents from genuine third countries with Spanish property — particularly in the Balearic Islands, where the difference between the state and regional regime is especially large. Anyone who may have overpaid Wealth Tax in the years before 2021 should promptly have it checked whether a correction application is still possible — limitation periods are running, and for 2020 in particular, time is now of the essence at the point of publishing this article.

For a general overview of Spanish Wealth Tax for non-residents, see our guide on the Wealth Tax cap. Fiscaro itself focuses on the ongoing Modelo 210 declaration — for Wealth Tax review and potential refund applications, we recommend consulting a specialised tax adviser.

→ Calculate your Modelo 210 tax now