The Andalusian Government has unveiled a game-changing taxation U-turn, scrapping wealth tax for residents and second homeowners in the region, taking effect from today 21 September.
As Andalucía joins the ranks of the world's most tax-friendly havens, Spanish nationals and foreigners with worldwide assets of €700,000 from Granada to Seville and across the Costa del Sol will no longer pay tax on their worldwide assets.
The president of the Junta, Juanma Moreno, said the abolition will attract investment to the region, and he also announced a reduction in the rate of income tax and the cancellation of the water tax in 2023.
In a statement the Junta said "the decree law approved by Andalucia's Governing Council contemplates the abolition in practice of the Wealth Tax by means of a 100% discount on the quota . As it is a ceded tax, only the central government has the power to abolish it.
"The objective of this measure is to attract new taxpayers to Andalusia and for this autonomous community to become the fiscal residence of a greater number of taxpayers. Many of them already live in Andalusia, but do not have their fiscal residence here. If they had it, they would be obliged to pay taxes on all their assets throughout the world."
The statement on 19 September added: "The Wealth Tax represents barely 0.6% of the community's tax revenue. The drop in revenue due to the abolition of the Wealth Tax can be alleviated with the increase in taxpayers foreseen in IRPF, as already happened when 100% of the Inheritance and Gift Tax quota was subsidized for relatives in groups I and II. Andalusia multiplied by four in personal income tax the amount that was not collected due to the abolition of this tax.
"Wealth Tax is considered an anomaly in advanced countries. In the scope of the OECD, in addition to Spain, it only survives in Norway and Switzerland.
"The fact that it does not exist in our immediate environment, including the community of Madrid, has caused the Wealth Tax to behave with a brake when potential taxpayers install their tax residence in Andalusia."
In early reaction to the news, Victor France, Group CEO of Abbey Wealth, said: "We speak with lots of potential expats who have found the wealth tax a barrier. It's something they may not have experienced before. A more attractive tax regime will certainly add to the appeal of the region and is a shrewd move by local government to encourage more high net worth individuals, investors and businesses to establish their permanent residence in the region".
He added: "We have provided investment advice to English-speaking expats from our office in Andalucia since 2007, helping minimise tax liabilities - and maximise opportunities - both at home and abroad".
He further highlighted that people considering a permanent move to Spain - or any other country - need to review their financial plans as soon as they start to think about a move.
