The REAL DECRETO-LEY 2/2008, of 21st April, containing several initiatives to improve the economic environment in Spain was passed by the Government last week. Unfortunately the regulations regarding Wealth Tax abolition is not yet included. Keep watching this space
Zapatero's government announced several economic measures, together with the Wealth Tax abolition we indicated last week.
Do we know how these measures may stimulate the economy and encourage more foreign investment? This is to be seen when the announcements are translated into statutes.
We believe it is encouraging, to say the less. The statutes and rules will be detailed over the next months and we should continue commenting on those:
• Abolition of the annual charge for Wealth Tax, as we announced in our last post.
• A new deduction for earned income, including pensions, equal to 0.9% of the
net family disposable income.
• Improved tax treatment for refurbishment of buildings.
• Improved system for repayment of VAT
• Greater flexibility for mortgage borrowers to renegotiate the term of the loans, and a reduction in fees and costs associated
• Improved tax treatment for non residents who invest in public debt
Friday 18th April 2008 will be remembered as the day when the Spanish Wealth Tax (Impuesto de Patrimonio) was suppressed by the Counsel of Ministers.
The abolition will be effective for this tax year, i.e. 31st December 2008.
How will this change affect High Net Worth Individuals living or wanting to move to Spain?
This change will make possible for many individuals to stop worrying about paying taxes on worldwide assets and start paying a flat 18% Income Tax in Spain, if their income is coming from investments, dividends or capital gains. Compared with the hectic 43% suffered by most taxpayers, this is an interesting incentive to consider relocation to Spain.
We shall keep informing on the legislative development and regulations on these great news.
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