Holiday Homes in Spain to be hit with Wealth Tax

The Spanish Socialist government is to reinstate the wealth tax on holiday homes; it was eliminated in 2008 to bring Spain in touch with other countries in Europe.

It has been decided that the tax will be paid on net assets above €700,000, which excludes an allowance of €300,000 for main residences but not holiday homes. There’s slight controversy in the fine print though; the decision on the exact amount of tax free allowances are down to the decision of regional governments, so, it will vary from region to region.

Unless there’s a drastic rethink before the it’s rebirth, current wealth tax for Catalonia, Andalucia, The Valencian Community, The Balearics and The Canaries stands at 108,200 EU.

Highly unlikely to win the upcoming election in Spain the current, Socialist, government’s move to reinstate the wealth tax could be short lived, although, opposition party Partido Popular publicly oppose the tax they’re keeping their options open; they’re likely to keep the tax but blame the socialist for its introduction.

“The tax is unjust and disregards the impact that the holiday home industry has on the Spanish Economy.”

When compared to other countries, the holiday home industry in Spain has a great deal of importance in the economy. Placing a wealth tax on holiday homes will only reduce interest from overseas investors and cause implications for jobs in tourism and property, resulting in a decline in tax revenues.

People don’t like being taxed, let alone being taxed on savings. Anyone with sense will funnel their money in to different European Countries, and as cash is sucked out of Spain the government will need to increase its borrowing thus further tax rises.

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source: Global Edge