“Suppression “ of Wealth Tax from 1 Jan 2008
In a press release dated 18 April 2008, the Finance Ministry (Economía y Hacienda) announced a bundle of measures designed to “stimulate the economy”.
Included in these is the “elimination of the charge” to Wealth Tax (Impuesto sobre el Patrimonio). This is to be with effect from 1st January 2008. The statement goes on to say that the “last declaration to be presented for this tax will be that for the fiscal year 2007”.
This is remarkably good news for all taxpayers, resident or not. It will, however, be interesting to see quite how the proposal will be implemented, given that all other personal taxes (income, gains, and gifts/inheritnances) use Wealth Tax as a trigger (and as a valuation method).
It is easy to see how the government could simply reduce the tax rate to zero (“eliminating the charge”). It is less easy to see how they can repeal the requirement for a declaration without also re-writing other personal tax legislation.
We await further developments.
17th June 2008: Developments!
I’m sure they do it just to confound me. On 13th June the Council of Ministers (equivalent of the UK Cabinet) issued a paper confirming that not only that will all taxpayers receive a credit of 100% of any Wealth Tax otherwise due from 1 Jan 2008 onwards, but also that the requirement to present a Wealth Tax declaration in 2009 (in respect of 2008) is “suppressed”.
The paper makes clear that these measures apply to all tax payers, including non-residents. Oh – and they hope that this will stimulate the economy in general, and the property market in particular. They reckon this removes a disincentive to purchase of Spanish property by foreigners.
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