Andalucia abolishes Wealth Tax

Simply put, following the example of the liberal region of Madrid, he will implement a tax allowance of 100% on wealth tax. This, in practice, is equivalent to abolishing wealth tax in the region of Andalucía, so taxpayers will pay nada going forward.

Affluent taxpayers (broadly defined as having an estate of over €700,000) will no longer pay wealth tax in Andalucía, unlike every other region in Spain. This ground-breaking change benefits both residents and non-residents alike.  

This last (tidal) wave of tax reductions reported yesterday is the latest in a long string of tax changes that de facto turned Andalucía into a low-taxation area. Besides Madrid, no other region in Spain has such low taxes as Andalucía, and last time I checked, Madrid has no beach!

A quick recap of the taxation that applies in Andalucía

It is easy to get lost in all the recent tax changes, so here's a summary of the taxation that applies to Andalucía:

• No inheritance tax (IHT). You are only taxed at 1% on the excess over 1mn euros. In practice, this leaves out 99.99% of taxpayers.
• Inheritance tax. 99% tax reduction on acquiring a main home for Groups I and II (irrespective of value). 
• Inheritance tax. 99% tax reduction on acquiring business/company for Groups I, II, and III.
  • Group I: Natural and adopted children under 21.
  • Group II: Natural and adopted children over 21, spouse, registered civil partnerships, parents, adoptive parents, grandparents, and great-grandparents.
  • Group III: Relatives in the second and third degree: in-laws, brothers/sisters (siblings), nephews/nieces, aunts, and uncles
• No wealth tax.
• Gift tax. 99% tax reduction on parents gifting money to children to buy a primary home.
• Gift tax. 99% tax reduction on parents gifting the main home to children. 
• Gift tax. 99% tax reduction on parents, or family members, gifting capital to set up a business (capped at €1,000,000).
• Stamp Duty on off-plan properties has been reduced to a flat rate of 1.2% (20% discount)
• Property Transfer Tax on resales has been reduced to a flat rate of 7% (the sliding scale has been removed, which has brought massive tax savings of between 12% to over 30%, contingent on the asking price)
• Landlord tax relief. If you are a tax resident in the EU or EEA, you stand to benefit from huge tax relief that on average, reduces your landlord tax bill by 70% or more.
• Landlord tax relief. If you area  tax resident in the EU or EEA, your tax rate is 19%, compared to the general rate of 24%.
• Personal income tax or IRPF (applies only to tax residents in Spain). It has been deflated in line with inflation on the regional band, which translates into a significant tax reduction.

What this means for buyers in Andalucía

In short, following the latest tax changes, Andalucía has become Spain's region with the lowest taxation. Nowhere else in Spain - other than Madrid - will you find such low taxes.

In effect, all these changes have ushered in a new tax era, triggering a Buy-to-Let boom on the costas. If you add that banks still apply ultra-low interest rates and spreads on mortgage loans, it means there has never been a better time to invest in property.

Bottom line, if you don’t fancy paying high taxes or none at all, Andalusia is your place of choice. 

The last batch of tax changes make Andalucía the hottest place to invest in all of Spain.