Wealthtax
Wealth tax
- 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
In plain words
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.
When it needs to be calculated
What falls into the base
- Real estate
- Securities and accounts
- Business interests
- Tax-free threshold
- Rate on a scale
- Deduction of liabilities
- Resident — worldwide assets
- Non-resident — local assets
- First-year rules
- Main home in some countries
- Pension savings
- Business assets
How to take it into account when choosing a country
- 01Assess the structure of your assets
- 02Check whether the country has the tax
- 03Confirm the scope of the base for residents
- 04Calculate the burden on the numbers
- 05Decide on residence
What you need to know
- The tax is levied on assets, not income
- It does not exist everywhere and has been abolished in many countries
- There is usually a significant tax-free threshold
- For residents the base often includes worldwide assets
- Certain types of property may be excluded
Common mistakes
- Choosing a country only on the income tax rate
- Not taking into account the inclusion of worldwide assets in the base
- Ignoring targeted taxes on expensive real estate
- Calculating the burden without thresholds and deductions
- Not checking the rules for the first year of residence
What this means for a BRIDGES client
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.
Frequently asked questions
01 /What is a wealth tax?
An annual tax on the value of the assets you own, not on income received.
02 /Does every country have it?
No. It exists in certain jurisdictions; in many it has been abolished or replaced by targeted taxes on expensive property.
03 /What is included in the base?
Usually real estate, securities, accounts and business interests. Some assets may be excluded under the country’s rules.
04 /Are foreign assets taxed?
For tax residents the base often includes worldwide assets. For non-residents, as a rule, only property in that country.
05 /Is there a tax-free threshold?
As a rule, yes, and it may be significant. The tax affects capital above a certain level.
06 /How does it affect the choice of country?
Directly. For owners of substantial capital, taxes on assets may weigh more than the income tax rate.
See also
Read next
This material has undergone editorial review by BRIDGES.
Choosing a country to move to?
We will calculate the total tax burden for your asset structure — under several options.