IS ANDALUCIA BECOMING A TAX HEAVEN? NO MORE WEALTH TAX!

As of next year, the wealth tax in Andalucia will no longer exist after the regional government’s decision to offer residents and non-residents 100% exemption from the tax. The measure comes into effect in 2023 and will release around 16,700 taxpayers from their obligations.

 

Second region in Spain to abolish tax

With the latest exemption, Andalucia becomes the second region in Spain to abolish wealth tax. It follows in the footsteps of Madrid, the only other part of the country where there is no wealth tax.

The regional government announced that the objective behind ending wealth tax in Andalucia is to attract new residents to the region. It calculates that the measure will add 7,000 wealthy residents to Andalucia and add to the region’s economic appeal.

 

Previous wealth tax in Andalucia

In other parts of Spain, except Madrid, Andalucia and the Basque Country (with different fiscal rules), wealth tax is levied on your worldwide assets. Previously in Andalucia, wealth tax stood at 0.2-2.5%, applied to your assets.

There were, however, generous exemptions. For example, wealth tax was only applied to your main residence after the first €300,000 of fiscal value. And every individual had a personal allowance of €700,000.

These exemptions meant, in practice, that most people had no wealth tax obligations and, as a result, around only 16,700 people paid it in Andalucia in 2020.

 

No wealth tax for residents or non-residents

The new measure means that as of next year, residents and non-residents in Andalucia will be exempt from wealth tax. This comes as good news to non-resident owners of property on the Costa del Sol, for example, and adds to the area’s appeal to high-net-worth individuals.

 

Lower income tax in Andalucia

The package announcing the abolition of wealth tax in Andalucia also included tax cuts for residents. The regional government has reduced the percentage of income tax collected at a regional level.

 

As a result, residents whose annual income falls in the €12,450 to €35,200 bracket will benefit from a 4.3% deduction in their tax bill for Andalucia. Like wealth tax, this measure comes into effect during the 2023 tax year.

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