Abolition of the Spanish wealth tax retroactive until 31.12.2007

Spain’s economy is suffering a strong crisis. The most important assignment of the Zapatero-Government is to support private households allowing them to meet with their mortgage payments and moreover to create spending power. The government has decided a whole bunch of measurements some of which with immediate effect and some which will first have to pass legislative procedure. In one of the forthcoming editions of the Mallorca Magazine Lutz Minkner will explain and comment on the finalized measurements. The probably most important decision of the government is to abolish the wealth tax retroactive until 31.12.2007. This not only alleviates the household of residents but also of non-residents enormously. The property tax rate in Spain is between 0,2% and 2,5% of the assessment base. As far as real estate is concerned the assessment base normally is the sales price unless the tax office has fixed another higher tax type. For a property with a sales price of 1.500.000 € the tax rate is 1,3% = 19.500 € p.a.. The abolition of the wealth tax will probably provoke that many non-residents will change their tax domicile to Spain due to the fact that they had not done so before because so far they did not have e.g. to pay property tax in Germany.

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