Wealth Tax

Wealth tax is currently charged in some countries, including France, Spain and Portugal. It’s an additional tax for people whose combined assets are worth more than a certain value.

If you’re moving to one of these countries, be aware that you could potentially pay annual wealth tax on top of income tax.

You could also be liable if you remain resident in the UK but hold high-value assets in France, Spain or Portugal.

 

Who Will Pay Wealth Tax?

In Spain, whether you have to pay wealth tax or not depends on the value of the capital assets you own, not your income. This can include real estate, savings and investments, jewellery, art, furniture, cars and boats.

In France and Portugal, wealth tax only applies to real estate assets.

As a result, people who have a low income but own a high-value home, for example, can find this a difficult tax to pay. It can prove to be an expensive tax for anyone unprepared for it.

French Wealth Tax

Wealth tax is payable by residents in France with worldwide real estate assets worth over €1.3 million. Non-residents are liable only if they own French real estate valued over the same threshold.

Before 2018, wealth tax was much greater in scope and looked at the total value of all assets, including property, savings and investments, cars and jewellery. Any tax returns prior to this year will therefore need to take this into account. The allowances, thresholds and rates have not changed.

Although French wealth tax is triggered at €1.3 million, it’s only the first €800,000 of the combined value of all of your property that’s tax-free. You’ll need to pay between 0.5% and 1.5% on anything over this each year.

See more about taxes in France
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Spanish Wealth Tax

In Spain, wealth tax was reinstated in 2011 as a temporary measure but it has remained in place since then. It could affect you if your combined worldwide assets (for residents) or Spanish assets (for non-residents) are worth over €700,000. What you’ll pay can vary according the region of Spain in which you or your assets are based, but it ranges from 0.2% to 3.5%.

In most regions, there’s a tax-free allowance of €700,000 per person, plus €300,000 for Spanish residents against the value of their main home. This can be doubled for couples.

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Portuguese Wealth Tax

Portugal’s version of wealth tax affects those whose ownership of Portuguese property is worth over €600,000, regardless of where they are resident. Rates are 0.4% for properties held by companies, 0.7% for individuals and 1% for those whose share in Portuguese property goes over €1 million.

There is a €600,000 allowance deducted from the value of all Portuguese properties owned by individuals, but not companies. So married couples and civil partners, for example, can have a combined allowance of €1,200,000 on their home before the tax is due. However, some types of owners, such as certain companies, aren’t eligible for any allowance at all and will be liable for wealth tax on the full value of all properties owned.

See more about taxes in Portugal
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How we can help with wealth tax advice

There may be steps you can take to reduce your wealth tax liability, or eliminate it completely, particularly on your investment assets. If you haven’t moved to France, Spain or Portugal yet, you can get the most benefit by taking our professional advice before you move.

We can help you understand how the French, Spanish and Portuguese wealth tax rates, rules and allowances affect you. We can then structure your assets in the most effective way to legitimately shelter them from wealth tax, as well as the other taxes in these countries.

Find more taxes on our Tax Planning page

Arrange a consultation with your local adviser.
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