Andalusia becomes even more attractive from a fiscal point of view with abolition of wealth tax
Spain consists of 17 separate federal states that have autonomous fiscal powers. For instance, they have the power to grant individual exemptions and reductions, among other things, in wealth tax and gift and inheritance tax. Andalusia's regional government exercised this power this week and is introducing a new wealth tax regime.
This tax will be levied on the total value of the worldwide assets of Spanish residents. So if you move permanently to Spain, and you still have assets in Belgium or elsewhere, know that these assets will be taxed annually in Spanish wealth tax. The wealth tax also applies to non-residents in respect to their assets in Spain, including Spanish property.
However, you are always entitled to a non-taxable minimum asset. This means that below a certain threshold, you are not obliged to paying wealth tax. The non-taxable minimum depends on the region. In the Comunidad Andalucía, this non-taxable minimum was €700,000. In addition, there was an exemption for the property in Spain serving as the main residence. This exemption was limited to €300,000. The excess was taxed annually at progressive rates. The progressive rate is also determined by the regions and was a maximum of 2.5%.
This wealth tax was now eliminated in its entirety with the publication of Decree 7/2022 and this from the fiscal year 2022. A tax reduction of 100% is provided so that effectively no tax is due. The new scheme is designed to bring wealthy residents and investors to Andalusia, thereby boosting economic activity and employment. The only other region that previously provided such an exemption was Madrid.
We also point out that Andalusia already had a 99% tax reduction on inheritance and gift taxes between spouses, parents and children.
The new measures thus create a very favourable tax environment in the region.
Read more about this here (Lener.es).