Wealth tax is currently charged in France and Spain. It’s an additional tax for people whose combined assets are worth more than a certain value. In 2017, it was also introduced in Portugal as a tax on owners of high-value real estate.
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’ll pay wealth tax?
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 Portugal, it only applies to property that isn’t used for tourist, commercial, industrial or agricultural purposes.
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
If you’re resident in France and the total value of your household’s worldwide assets is over €1.3 million, you’ll be liable for French wealth tax on the value of your assets over €800,000. Non-residents only have to pay wealth tax if they have French assets valued over the €1.3 million threshold.
Although wealth tax is triggered at €1.3 million, it’s only the first €800,000 of the combined value that’s tax-free. You’ll need to pay between 0.5% and 1.5% on anything over this each year.
Spanish wealth tax
In Spain, wealth tax was reinstated in 2011 as a temporary measure but it’s still in place for the 2017 tax year at least. 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%.
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.
Portuguese wealth tax
Wealth tax in Portugal is charged at a fixed rate of 0.3% on the value of non-commercial Portuguese real estate, regardless of where the owner is resident.
You are liable if your property, or your share of a jointly-owned property, is worth over €600,000. So married couples and civil partners, for example, can have a combined allowance of €1,200,000 on their home. However, some types of owners, such as certain companies, aren’t eligible for any allowance.
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 or Spain 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.
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