The regional government has announced the end of wealth tax in Andalucia as of the 2023 tax year. The measure is designed to attract new wealthy residents to the region. It accompanies a reduction in income tax for the lower earnings brackets.
How will the abolition of wealth tax in Andalucia work?
The regional government has decided to apply a 100% exemption to wealth tax (impuesto sobre el patrimonio in Spanish), which, in practice, removes obligations for all taxpayers. As a result, from the 2023 tax year, wealth tax will no longer be collected in Andalucia.
Why has the regional government abolished it?
The measure aims to remove fiscal pressure on wealthy individuals and encourage them to become residents in Andalucia. The regional government estimates that it will attract 7,000 new residents next year.
What about the rest of Spain?
The abolition of wealth tax in Andalucia is something of an exception in Spain. In fact, it is only the second region in the country to do so. Andalucia, therefore, joins Madrid.
All other regions except the Basque Country, which has a different fiscal regime, levy wealth tax. The tax applies to residents’ worldwide assets and to non-residents’ property assets in Spain.
What’s the saving on wealth tax in Andalucia as a result of the measure?
Currently (including the 2022 tax year), wealth tax is charged on a sliding scale of 0.2% to 2.5% on the value of assets, worldwide or in Spain depending on your residence status. However, there are exemptions as follows:
- Up to €700,000 allowance on personal assets excluding your main residence.
- Up to €300,000 allowance on the fiscal value of your main residence.
In practice, these allowances mean that most people are exempt from paying wealth tax. As a result, around only 16,700 people paid the tax in Andalucia in 2020 (latest data available).
The latest measure exempts everyone from wealth tax.
When does the measure come into effect?
From the 2023 tax year.
Will I still have to pay wealth tax in Andalucia for 2022?
Yes, unless you are exempt (see above).
To get the maximum benefit from the latest tax-saving measures in Andalucia, contact our team for professional advice.