MADRID – After the Spanish Constitutional Court approved the tax on large incomes, more and more wealthy individuals are leaving Spain for Portugal.
Portugal is responding to Spain’s adoption of this tax by extending its special tax regime for non-regular residents (similar to Spain’s “Ley Beckham”) for one year. That is attractive for Spanish wealthy people.
Moreover, this trend has intensified following the recent re-election of Pedro Sánchez as president. This has led to an increase in wealthy taxpayers seeking legal advice for a quick change of tax residency. Héctor Pérez Tapia of Selier Abogados notes in the newspaper El Economista that most consultations come from foreigners, especially from Latin America, who have previously moved to Spain due to political instability and security problems in their home countries. These clients are now considering a move to countries such as Portugal, Italy or Switzerland.
Lower income tax rates
The Portuguese scheme for non-regular residents, together with the “Golden visas”, offers lower income tax rates, exemption from tax on foreign income, a flat tax rate of 20% on income from certain professions, and tax exemptions on inheritances, donations and wealth taxes. Participants can enjoy this regimen for a period of ten years.
Assets of more than three million euros
The reactivation of the wealth tax in Spanish regions such as Madrid and Galicia (Andalucia is studying it), following the adoption of the tax on large wealth, therefore influences this trend. The tax applies to assets of more than €3 million, with the first €700,000 exempt. This affects regions such as Madrid and Galicia, where wealth taxes had previously been reduced.
Number of wealthy people in Spain has grown
According to data from the Spanish tax authorities, the number of wealthy individuals in Spain has increased by 33% over the past decade to 231,367, with an average wealth of €3.66 million. In Madrid this average is even €11.6 million (20,030 individuals). This, therefore, highlights the impact of these tax measures on a significant part of the Spanish population.