Wealth Tax in Andalucia – Abolished?
Decree-Law 7/2022, of September 20, has modified Autonomous Law 5/2021 in such a way that a new article 25 bis is created, according to which it is established that, after the deductions and bonuses regulated by the regulations of the State, a regional bonus of 100% of said fee will be applied to the resulting fee if it is positive.
National vs. Regional Taxation
Spain has a somewhat complex tax system where some taxes, including the wealth tax, are managed both at the national and regional levels. The national government sets a baseline for the wealth tax, but the autonomous communities (regions) have the authority to modify or even eliminate the tax within their jurisdictions.
Andalusia’s Decision
Andalusia, an autonomous community in southern Spain, decided to eliminate the wealth tax in 2022. This was part of a broader strategy by the regional government to attract investment and high-net-worth individuals to the region. The move was designed to make Andalusia more competitive compared to other regions in Spain, especially those like Madrid, which had already abolished the wealth tax.
Before this change, Andalusia, like other regions, had applied its own rates and exemptions within the framework provided by the national government. The wealth tax typically had progressive rates, starting from a threshold (e.g., €700,000 nationally, with some regional variations) and increasing with the value of the taxable wealth.
Impact of the Abolition
By eliminating the wealth tax, Andalusia aimed to boost economic growth, attract new residents, and encourage investments. This abolition means that residents in Andalusia no longer have to pay this tax, which can be significant for those with substantial assets. The region hoped that this tax policy change would make it more attractive for both Spanish nationals and foreigners seeking a favorable tax environment.
National Wealth Tax Considerations
Despite Andalusia’s abolition of the wealth tax, Spain’s national government still has a framework for the wealth tax, which applies to all regions. However, in practice, if a region like Andalusia decides not to levy the tax, residents there do not pay it. The central government could theoretically introduce compensatory measures or changes to national law if there is a significant shift in regional tax policies, but as of now, residents of Andalusia benefit from the tax’s elimination.
Therefore, taking into account that the accrual of the tax occurs in any case on December 31, since 2022 this Tax is not paid in Andalusia.
TLACORP 2023
