Has The Reintroduction Of Wealth Tax Backfired For The Government?

12.03.12

Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

The lead story in our last quarterly newsletter last year was the reintroduction of wealth tax in Spain. In December 2008 the Spanish government had approved a measure to apply a 100

The lead story in our last quarterly newsletter last year was the reintroduction of wealth tax in Spain. In December 2008 the Spanish government had approved a measure to apply a 100% tax credit against an individual?s wealth tax liability from 1st January 2008, effectively abolishing wealth tax from that date. In September 2011 the tax was reinstated as a temporary measure, to apply for 2011 and 2012 (tax payable in 2012 and 2013).

The government had not wanted to reinstate the tax but was left with little choice as it needed to increase revenue for the state. Wealth tax is however one of the taxes that can be varied by region, and the Comunidad Valenciana (Valencia, Alicante and Castell? provinces), Islas Baleares and Madrid have since announced that they will continue to apply the 100% tax credit. Residents of these regions therefore do not pay any wealth tax, regardless of the level of their wealth.

The reintroduction of wealth tax has backfired somewhat for the government as it will not be able to collect the amount of revenue they had hoped for. While this is good news for wealthy people who live in the Comunidad Valenciana, Islas Baleares and Madrid, it could have negative consequences for everyone in Spain as the administration may have to put up taxes elsewhere to compensate.

The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual must take personalised advice.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

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