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Everything you need to know about wealth taxes and which countries enforce them
Alex Stojkovic
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Investments
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October 27, 2023
2022 saw a handful of countries increase net wealth taxes and property taxes, according to the Organisation for Economic Co-operation and Development (OECD).
The OECD Tax Policy Reforms 2023 report revealed that governments had implemented reforms directed towards lowering the tax burden on low-income earners and reducing taxes on energy products in the hope of protecting households and businesses from high inflation.
A wealth tax is imposed on your net wealth, or the market value of your total owned assets minus any debts.
For example, if you have $3.5 million in assets but $500,000 of outstanding debt, your net wealth would be $3 million. If you lived in a country where wealth taxes applied to all wealth in excess of $1 million, then a 5% wealth tax would mean you'd need to pay $100,000 in taxes (5% of $2 million).
Countries that have recently imposed wealth taxes
In response to the rising costs of living, the Telegraph reports that Spain introduced a temporary “solidarity tax” on residents with more than €3m (£2.6m), effective in 2022 and 2023.
Other governments also introduced property tax reforms, the OECD said, by raising top property tax rates or targeting individuals who use property as an investment vehicle.
Colombia's Congress approved a bill for a permanent wealth tax on individuals with a net worth of more than $642,000 (£515,000). This replaces a temporary wealth tax that was established during 2020 and 2021. It means that wealthy individuals will be taxed at between 0.5% and 1%. Although a 1.5% rate will apply until 2026.
Chile has also introduced an annual 2% tax on “certain luxury goods held in the country” – including yachts, cars, and helicopters.
So far, the only other OECD countries that have imposed some form of wealth tax are France, Norway, and Switzerland.
In 2023, Norway increased its higher rate for those worth between Nkr1.7m (£130,000) and Nkr20m (£1.5m) from 0.95% to 1%. This led to reports that some super-rich people chose to up sticks and leave the country.
The map below provides a clear visual for which countries apply a wealth tax, and whether individuals are taxed on net wealth (green) or selected assets (yellow).
The rate of tax on wealth applied in different countries
As you've seen, wealth tax rates vary from country to country, and also vary depending on factors such as residential status. For instance, the wealth tax in Spain is calculated differently depending on whether you're a resident or non-resident.
Wealth taxes in Spain
Spanish tax law is highly regionalised, and so Spanish wealth tax rates vary between different regions. Taking that into consideration, below you’ll find the national wealth tax rates in the table below. If you’re a non-Spanish resident, you’ll be subject to the national rates.
The wealth tax applies to all Spanish residents with worldwide assets of €700,000 or more (or €500,000 in Catalonia), and to non-residents who hold Spanish assets over the same value.
The Spanish wealth tax reaches far and wide, and assets that are taken into account include:
Property
Jewellery
Cars
Yachts
Planes
Fur coats
Antiques
Art
Intellectual property rights (unless held by the author)
Life insurance
Though it seems unlikely from the list above, there are some assets that are exempt. These include essential business goods (if the business is your main source of income), some shares, and certain assets of historical or cultural significance.
If you're a Spanish resident, you have a tax-free allowance of €700,000, plus an extra €300,000 allowance for your permanent home or place of residence. If you are married, the extra €300,000 can be combined, allowing a maximum total tax-free allowance of €2 million for you and your spouse.
In some good news, there is a limit to how much you can pay in tax each year. The combined total of Income Tax and wealth taxes cannot exceed 60% of your total taxable income.
Although Spanish wealth tax rates vary by region, the table below set out the national rates.
France
A wealth tax is payable by all households resident in France with worldwide real estate assets worth more than €1.3 million. If you are not resident in France, the tax is only imposed if you own French property with a total value over the same amount.
The French wealth tax is levied on households, not individuals. As a result, it's calculated based on the combined assets of:
An individual
Their spouse or partner
Children under 18.
If you have adult children, when it comes to wealth tax, they are treated as a separate household, even if they are treated as part of your household for French Income Tax.
Portugal
The Portuguese wealth tax is levied on property worth €600,000 or more, whether you are resident or not. The tax-free allowance can be combined with that of your spouse, so if you’re married you have a €1.2 million allowance.
The Portugal wealth tax is relatively simple. Tax is levied at the rate of:
0.7% on personally owed properties valued between €600,000 and €999,999
1% on properties valued at €1 million or more
0.4% for properties owned by a company.
We take tax seriously
While tax efficiency may not be your primary goal for deciding to live in one country over another, tax may be one factor that you need to consider when it comes to your long-term financial plan.
For this reason, along with your goals and objectives, tax is very much a priority when providing the most suitable advice to you.
Since tax advantages vary from country to country, it can be difficult for any one individual to be an expert in all of them. That is why we have experts around the world who are well-placed to be able to help you regardless of your country of residence.
Get in touch
Whether you want to understand more about wealth taxes in a certain country or to ensure that your financial plan remains as tax-efficient as possible, we can help.
