Updated
GL-W-04
01 / In 30 seconds
The short answer
- What it is
- An annual tax not on income but on the value of the assets you own
- How it differs
- Income tax is levied on earnings; this one on accumulated wealth
- Where you encounter it
- In certain countries; in many it has been abolished or replaced by targeted taxes
- What matters
- For residents the base often includes worldwide assets, for non-residents only local ones
- Why it is critical
- A change of residence may bring all your capital into the tax base
02 / In plain words
What Wealth tax means
A wealth tax is levied not on income but on the value of the assets you own: real estate, securities, business interests and sometimes luxury items. It has to be paid every year, regardless of whether those assets have generated income.
Such a tax exists in certain countries; in many it has been abolished or replaced by targeted charges — for example, higher taxes on expensive real estate. There is usually a tax-free threshold, so the tax affects only capital above a certain level, and rates are, as a rule, low in percentage terms.
The key point for those who are relocating: the scope of the base depends on residence. For tax residents the base often includes assets worldwide; for non-residents only property in that country. In other words, a move may bring all your capital into the base, not just the local flat. This is one of the reasons why the choice of country of residence is made on the numbers rather than on a general impression.
A case from practice
A client was comparing countries on the income tax rate. Once taxes on assets and real estate were added to the calculation, the picture changed: the country with the higher income tax rate turned out to be more favourable in terms of the total burden, given the structure of the client’s capital.
When it needs to be calculated
- Choosing a country of tax residence
- Relocating with substantial capital
- Buying expensive real estate
- Comparing jurisdictions for relocation
- Planning the ownership structure
- Assessing the total tax burden
03 / What it covers
What falls into the base
Assets
- Real estate
- Securities and accounts
- Business interests
Calculation
- Tax-free threshold
- Rate on a scale
- Deduction of liabilities
Coverage
- Resident — worldwide assets
- Non-resident — local assets
- First-year rules
Exemptions
- Main home in some countries
- Pension savings
- Business assets
04 / How it works
How to take it into account when choosing a country
Assess the structure of your assets
Real estate, securities, accounts, stakes - where and how much.
Check whether the country has the tax
Whether there is a wealth tax or an equivalent.
Confirm the scope of the base for residents
Whether foreign assets are included and what exemptions apply.
Calculate the burden on the numbers
The threshold, rates and tax amount for your wealth.
Decide on residence
We compare countries by total burden and choose.
05 / Key facts
What you need to know
01Tax base
The value of assets
Real estate, securities, accounts, business stakes. It is paid every year, even if the assets earn nothing.
02Where it exists
In some countries
Many countries have abolished it or replaced it with taxes on expensive property.
03Threshold
Only wealth above a level
There is usually a tax-free allowance, and the rates are small in percentage terms.
04Residence
Worldwide or local assets
For residents the base often includes assets worldwide; for non-residents only property in the country.
Common mistakes
Choosing a country by its income tax rate
Calculate the total burden including taxes on assets and property.
Missing that worldwide assets will be included
Check the scope of the base for residents before moving.
Forgetting taxes on expensive property
Check local taxes on property above a certain value.
06 / Expert advice
How to prepare in advance
When choosing a country, the full tax picture is calculated, not a single rate: income tax, capital gains tax, wealth tax where there is one, and property taxes. The scope of the base for residents and the first-year rules are checked separately — sometimes they are more lenient, and this affects the choice of moving date.
What we do for you. We calculate the total tax burden for your asset structure rather than comparing countries on a single rate. For owners of substantial capital, taxes on assets often matter more than income tax.
Dmitry NagyTax consultant, international taxation and compliance (ex-Big4)
07 / Questions
Frequently asked questions
An annual tax on the value of the assets you own, not on income received.
No. It exists in certain jurisdictions; in many it has been abolished or replaced by targeted taxes on expensive property.
Usually real estate, securities, accounts and business interests. Some assets may be excluded under the country’s rules.
For tax residents the base often includes worldwide assets. For non-residents, as a rule, only property in that country.
As a rule, yes, and it may be significant. The tax affects capital above a certain level.
Directly. For owners of substantial capital, taxes on assets may weigh more than the income tax rate.
INITIAL ASSESSMENT
Tell us what outcome your family needs
We will design a solution for your case, choose the country and the right status, and take the whole process through to the result.
