Andalusia scraps wealth tax for residents and non-residents

The Regional Government of Andalusia approved Decree-Law 7/2022 on wealth tax (Form 714). Since September 20, there has been a 100% reduction of the quota for wealth tax.  The objective of the Andalusian government, chaired by Juanma Moreno, is to increase the number of tax residents in Andalusia, attract more talent with investment capacity and create more employment.

The Wealth Tax represents barely 0.6% of the tax revenue of the Andalusian region, a percentage that will be offset by an increase in income tax collection.

In the scope of the OECD, wealth tax only exists in Norway, Switzerland and Spain. Madrid was the pioneer in abolishing the wealth tax in its autonomous region, and as of Thursday, September 22, 2022, it has been abolished in Andalusia.
The Wealth Tax affects both resident individuals and non-residents (community and non-community) with assets and rights that are located in Andalusia

The elimination of the Wealth Tax in Andalusia has not pleased the central government, and the Ministry of Finance is already studying to approve a new tax on large fortunes. It would be a temporary tax that could come into force in January 2023. 

As expected, on September 29, 2022, among the fiscal measures presented by the government, is the tax on large fortunes, it will be temporary tax for fiscal years 2023 and 2024, avoiding double taxation. It will be paid by taxpayers with net assets of more than 3 million Euros and the tax rate ranges between 1.7% and 3.5%.

Finally, as a supplement to the Wealth Tax, the Government of Spain has declared by Law 38/2022 on December 27 a Temporary Solidarity Tax on Great Fortunes. Both residents and non-residents who have a net worth in Spain of more than 3,000,000 euros are subject to this obligation. Given that, taxpayers with high net worth pay no tax on the first $3,000,001 of their income.

It is announced as a two-year temporary tax, but it may be evaluated to see if it is kept in place over time or eventually eliminated.

 At Tejada Solicitors, we advise our readers that if you are thinking of changing your tax residence to Spain, speak with a tax professional so they can advise you on the tax invoice for this tax.

One of the objectives of Tejada Solicitors law firm is to study the tax implications of obtaining tax residence in Spain, therefore it is extremely important to obtain prior advice on the tax bill involved in moving to live in Spain.

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Author: Rosana Tejada

Biographical Info: Rosana Tejada Crespo is a tax advisor holding a Master’s Degree in International Taxation. She specialises in companies and freelancers, tax regulations concerning foreign employees (Beckham Law Spain), non-resident tax, inheritance tax and Spanish income tax. She is one of the founders of Tejada Solicitors, which comprises a group of English speaking solicitors, economists and architects.

Tejada Solicitors is an English-speaking law firm based in Malaga and Costa del Sol, specialised in property conveyancing, inheritance tax, residence for foreigners, self-employed tax declarations and most legal and financial aspects of relevance to foreigners and expats living in Spain. For any questions and enquiries regarding the Spanish market, don’t hesitate to contact us either by phone or e-mail.

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