I am actually in the process of moving because of a wealth tax so I wanted to chime in :)
Spain
Spain has a wealth tax that is very frustrating. It was designed when savings accounts were paying 5% interest and has not been updated since then. What does this mean in reality?
My family would pay ~75% of our income to live here. Not only because of the wealth tax but also because of the dividend/income taxes on top of it. Part of this is because I am American and America forces dividend payments where as Spain does not on stock ETFs (long story). Due to a loop hole we can stay for a few years, but we plan to leave in 6 months to Portugal.
It is also frustrating as if you do any angel investing you have to pay taxes on the assumed value of that investment (from talking to lawyers/accountants). So if I have a 0.5% stake in startup that is valued at $500k, I pay wealth taxes on that every year, but if it fails I don't get anything back or anything to write off against future capital gains.
It is def impacting investment in Spain.
All the rich people in Spain live in Madrid, as the city zeros out the wealth tax. But it is hampering entrepreneurship in all the other regions. And, because of some of the loopholes in the design of it, it boosts property ownership and lowers returns there because you can stash money in real estate to avoid it.
*And, because of this Madrid has huge concentrations of wealth.
Switzerland.
I also wanted to move to Switzerland so my wife could get her PHD. Had to skip it as it was going to cost ~$250k USD to be there for that period. In that time I would have started a company in Switzerland and so they lost that and taxes from the eventual exit on that.
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I do not like wealth taxes. I think they are supremely flawed and hard to pull off right. A few countries have. I understand the tax challenge, but I think you are better off taxing dividends progressively and taxing inheritance heavily.
I am actually in the process of moving because of a wealth tax so I wanted to chime in :)
Spain Spain has a wealth tax that is very frustrating. It was designed when savings accounts were paying 5% interest and has not been updated since then. What does this mean in reality?
My family would pay ~75% of our income to live here. Not only because of the wealth tax but also because of the dividend/income taxes on top of it. Part of this is because I am American and America forces dividend payments where as Spain does not on stock ETFs (long story). Due to a loop hole we can stay for a few years, but we plan to leave in 6 months to Portugal.
It is also frustrating as if you do any angel investing you have to pay taxes on the assumed value of that investment (from talking to lawyers/accountants). So if I have a 0.5% stake in startup that is valued at $500k, I pay wealth taxes on that every year, but if it fails I don't get anything back or anything to write off against future capital gains.
It is def impacting investment in Spain.
All the rich people in Spain live in Madrid, as the city zeros out the wealth tax. But it is hampering entrepreneurship in all the other regions. And, because of some of the loopholes in the design of it, it boosts property ownership and lowers returns there because you can stash money in real estate to avoid it. *And, because of this Madrid has huge concentrations of wealth.
Switzerland. I also wanted to move to Switzerland so my wife could get her PHD. Had to skip it as it was going to cost ~$250k USD to be there for that period. In that time I would have started a company in Switzerland and so they lost that and taxes from the eventual exit on that.
----
I do not like wealth taxes. I think they are supremely flawed and hard to pull off right. A few countries have. I understand the tax challenge, but I think you are better off taxing dividends progressively and taxing inheritance heavily.