Spain Introduces ‘Solidarity’ Wealth Tax for 23K People

  • Around one in every 1,000 taxpayers in Spain will have to pay a new wealth tax.
  • The government announced the tax on Thursday, which it expects will bring in up to 1.5 billion euros.
  • It also unveiled tax cuts for small businesses, the self-employed, and workers on or below the median income.

Spain has introduced a second wealth tax amid soaring inflation, adding an extra 3.5% tax on top of wealth over $10 million.

María Jesús Montero, the country’s minister of finance and public administration, announced the so-called “solidarity tax” on Thursday.

The government said that up to 23,000 people, or around 0.1% of all taxpayers, could have to pay the new tax, and that it could bring in as much as 1.5 billion euros ($1.46 billion).

To avoid people being double-taxed, the tax will only apply to the part of people’s assets not already taxed by their autonomous community, the government said. People will be taxed at a rate of 1.7% on assets between 3 and 5 million euros, 2.1% on assets between 5 and 10 million euros, and 3.5% on assets of more than 10 million euros (around $9.76 million).

The government said that it was a temporary state tax for 2023 and 2024, after which it will be reviewed to see whether to keep the tax.

Montero unveiled the solidarity tax as part of a package of fiscal measures she said was designed to make Spain’s tax system fairer and spread out the impacts of inflation and the country’s economic downturn.

Inflation exceeded 10% in Spain for three consecutive months during the summer, although moderated to 9% in September, data from the country’s statistical authority showed.

Montero also announced a cut in income tax for people earning less than 21,000 euros ($20,490) a year, which she said will save a total of 1.88 billion euros ($1.84 million) for half the country’s workers, as well as tax cuts for small- and medium-sized businesses and self-employed people.

The government also said it would lower the sales tax on feminine hygiene products, condoms, and contraceptives from 10% to 4%. Reuters reported that he said he had no intention to change food taxes.

The government is also raising taxes on companies with at least 200 million euros in annual income and expects to bring in an additional 200 million euros by increasing taxes on capital gains above 200,000 euros.

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