Net wealth taxes are recurring taxes on the wealth of a person with no debt. The concept of a wealth tax is similar to a property tax. But instead of only taxing real estate, it covers all wealth that a person owns. As today’s map shows, only three European countries levy a wealth tax, namely Norway, Spain and Switzerland. France and Italy levy wealth taxes on selected assets, but not on an individual’s net worth as such.
net wealth taxes
Norway levies a net wealth tax of 0.85 percent on wealth held by individuals exceeding NOK 1.5 million (€152,000 or US$170,000), with 0.7 percent going to local government and 0.15 percent to the central government. Norway’s net wealth tax dates back to 1892. As part of measures related to COVID-19, individual entrepreneurs and shareholders who realize a loss in 2020 are entitled to a one-year deferred wealth tax payment.
of Spain The net wealth tax is a progressive tax ranging from 0.2% to 3.75% on wealth over €700,000 ($784,000; lower in some regions), with rates varying significantly across Spain’s autonomous regions (Madrid offers a 100- percentage relief). Spanish residents are subject to tax worldwide, while non-residents only pay tax on assets located in Spain.
Switzerland collects its wealth tax at cantonal level and covers worldwide wealth (excluding real estate and business premises abroad). The tax rates and allowances vary greatly between cantons. The Swiss wealth tax was first introduced in 1840.
Wealth taxes on selected assets
France abolished the wealth tax in 2018 and replaced it with a real estate wealth tax this year. French resident taxpayers whose worldwide net real estate assets have a value of at least €1.3 million (US$1.5 million) are subject to the tax, as are non-resident tax residents whose net real estate assets are valued in France of 1.3 million euros or more has million. Depending on the net value of the real estate assets, the tax rate is up to 1.5 percent.
Italy taxes resident taxpayers’ financial assets held abroad without Italian intermediaries at 0.2 percent. In addition, properties held abroad by Italian tax residents are taxed at 0.76 percent.
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Note: While net wealth taxes are levied on all of an individual’s wealth (excluding debt), wealth taxes on selected assets only cover a portion of an individual’s wealth (such as financial assets).
Source: EY, Worldwide Estate and Inheritance Tax Guide 2020 and Bloomberg Tax, Country Guides.