Andalusia announces ending of wealth tax, making the region attractive to high earners
In a surprise but welcome move, the Andalusian Regional Government announced that as from Wednesday September 21, wealthy residents and non-residents (second home-owners in the region) will no longer pay wealth tax (el impuesto de patrimonio).
Andalusian regional president Juanma Moreno announced that Spanish nationals and foreigners who reside in Andalusia, or have a second home there, and whose assets are above €700,000 will receive a 100 percent tax deduction on the wealth tax.
Previously they had to pay tax on their assets.
Andalucia now becomes the second region, after Madrid, to bring in this dramatic tax cut.
Moreno explained that Andalusia’s wealth tax had been “an obstacle for investment”. He also highlighted that scrapping the tax would not have a major impact overall in terms of tax collection in the region, as it only represents 0.6 percent of Andalusia’s yearly tax revenue (€95 million).
Moreno continued that this measure would attract approximately 7,200 new high-earning tax contributors to Andalusia. Around 20,000 people in Andalusia paid wealth tax in 2021.
The regional governments of the country’s 17 autonomous communities have the freedom to introduce tax deductions (bonificaciones) and asset exemptions as they see fit, but up to now the only region in which the wealth tax was non-existent was Madrid.
Previously, taxpayers in Andalusia with their primary residence in the region did not have to include this as an asset in the €700,000 wealth tax calculation if the property was valued below €300,000.
If their assets still surpassed €700,000, they would have to pay between 0.2 and 2.5 percent on any amount above the threshold. For example, if a person’s assets added up to €750,000, they would pay 0.2 percent tax on €50,000.
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