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In an effort to attract more high-end investment and foreign property buyers, the president of the Junta de Andalucía this week announced his intention to do away with the Wealth Tax, which taxes people in Spain on the value of their assets. But could Alicante do the same and if so, what would this mean for expats living on the Costa Blanca?

 

“Getting rid of the Wealth Tax will benefit expats looking to move to the area because they will be able to live as residents and pay the same tax as non-residents,” explains Isaac Abad, a lawyer with Abad Abogados specialising in conveyancing, property law, taxes and residency in Alicante.

 

Many people who choose to buy a property in Spain do so as non-residents because they only have to pay tax on whatever assets they have in Spain, and not declare their personal income plus pay the Wealth Tax as a resident has to do.

 

By removing the Wealth Tax (known in Spanish as the ‘Impuesto sobre el Patrimonio’), Andalusia will become a more attractive place for foreigners to buy property in Spain.

 

However, it is unlikely, says Abad, that Alicante will do the same, mainly for political reasons.

 

“Andalusia is run by the conservative PP party,” says Abad, “and so are Murcia, Madrid and Galicia. Andalusia has decided to scrap the Wealth Tax following Madrid’s lead and it’s likely Murcia will be next.

 

“There will be a General Election in Spain in 2023, and the PP party will be looking to oust the standing Socialist government. The conservatives’ main claim to be the next ones to run the country and be better than the Socialists is that they are better on the economy, and they will try to persuade voters with measures made to stimulate the economy, such as eliminating the Wealth Tax to incentivise more people to invest in the country.”

 

Alicante, which is currently governed by a left-wing party in the Valencian Community, is thus not likely to get rid of the Wealth Tax any time soon because they say this tax helps to raise money from the rich to redistribute to the poor.

 

Indeed, the president of the Valencian Community, Ximo Puig, has explicitly stated he has no plans to do away with the Wealth Tax and has warned against the move to avoid any single area of Spain becoming a tax haven for ‘fiscal dumping’. 

 

In Murcia, on the other hand, it is more probable that the Regional government will try to get rid of the Wealth Tax come 2023, as they have been discussing for several years now.

 

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