Andalucia is getting rid of a ‘wealth tax’ imposed on second homeowners in Spain to attract investments.
The policy reduces the amount of taxes that expats have to pay on their properties, making Andalucia more attractive to foreigners looking for a second home in Spain.
The wealth tax (or “impuesto de patrimonio” in Spanish) was previously imposed to residents and non-residents with a net worth of €700,000 and over. Spanish nationals were charged on worldwide assets, while non-residents on Spanish assets only.
Now, Andalucia is the Spanish region with the second lowest tax requirements only after Madrid.
The wealth tax reduction is part of a plan to reduce the impact of rising living costs in Andalucia. With this move, the region hopes to attract investment to the area, promote economic activity, and increase job opportunities and funding for public services.
What do we gain from it? Attract investment and increase the number of taxpayers and collection. Objective: more activity, more employment and more resources for essential public services.Juanma Moreno, Andalusian regional president
According to Andalusian regional president Juanma Moreno, in 2023 the wealth tax reduction “will leave €360 million in the pockets of Andalusians”.
The wealth tax accounted for only 0.6% of the region’s total annual tax revenue, yet it discouraged wealthy residents from purchasing a house in the region.
In the last financial year, 50% of the top 20 highest taxpayers decided to leave Andalucia, leading to a €3.5 million loss in wealth tax, and a €14 million loss in personal income tax. The government hopes that the new policy will encourage high-earners to stay in Andalucia, increasing the number of taxpayers and collection.
Andalucia’s tax reform will also benefit those earning in the lower income brackets, who will see a 4.3% reduction in their personal income tax, as well as raised exemption levels.
Home of some of the most famous destinations in Spain, Andalucia is a popular spot among expats. To date, the region counts about 740,000 foreign residents. The UK and Romania represent the largest portion of expats in the region, with 88,000 and 75,000 residents respectively, followed by Italy with 24,000, and Germany with about 16,000.