For expats looking to move their wealth to Europe, understanding the legislation for taxes on wealth in Europe is vital. While all countries in Europe have their own tax regulations, some may be more attractive for financial planning than others. In this article, we’ll look at countries in Europe that charge a wealth tax, as well as the top European countries with no wealth tax.
The Truth About Wealth Taxes in Europe
There are many myths about wealth tax in Europe, so let’s set the record straight. Although collaboration across many legal policies exists, Europe does not have a uniform wealth tax system, and there is no continent-wide wealth tax. Individual countries tax authorities make their own decisions about whether or not to implement a wealth tax, and they set their own rates.
European wealth taxes vary considerably from country to country. Some countries impose very high rates (up to 4.77 percent), while others have none at all. The vast majority of countries in Europe that impose a wealth taxation fall somewhere in between rates of 0.1 percent to 0.5 percent.
The Wealth Tax Definition Explained
A wealth tax is a tax imposed as a percentage of everything an individual owns (assets), less any liabilities. Liabilities include any debts or financial obligations, such as a mortgage or personal loan.
There are two specific types of wealth tax:
Net wealth tax
A tax levied on a person’s global net worth.
Wealth taxes on selected assets
A tax levied on selected assets of what a person owns.
Countries with Net Wealth Taxes
Norway has an annual net wealth tax of 0.95 percent on net wealth above 1.7 million kr ($162,000) up to 2 million kr ($190,000), and 1.1 percent on net wealth above 2 million kr ($190,000). Norway’s wealth tax is only applicable above the tax threshold of 1.7 million kr ($162,000), meaning if your global net wealth is 2 million kr ($190,000), a wealth tax will be chargeable on 300,000kr ($28,500) of your net wealth.
Spanish wealth tax has three tiers: 1.7 percent between €3 and €5 million ($3.18 and $5.30 million), 2.1 percent between €3 and €5 million ($3.18 and $5.30 million), and 3.5 above €10 million ($10.83 million). Like Norway, you only pay tax on financial assets above the threshold of €3 million ($3.18 million). Wealth tax is also charged by tier, not a flat rate, so if your worldwide assets amount to €11 million ($11.65 million), the 3.5 percent wealth tax will only apply to the amount exceeding €10 million ($10.59 million).
Switzerland’s wealth tax is determined at the cantonal level, and each canton has its own legislation. The wealth tax typically ranges from 0.3 to 0.5 percent but can be more than four percent. The thresholds generally start at CHF 77,000 to CHF 308,000 ($82,000 and $327,000), with the highest being at or above 3.16 million CHF ($3.4 million).
Countries with Wealth Taxes on Selected Assets
Are you wondering if France still has a wealth tax? The answer is yes. Individual net wealth taxes were repealed in 2018 and replaced by a real estate wealth tax. This tax is levied on the net value of worldwide real estate assets, valued at or above €1.3 million ($1.38 million), and you are legally obligated to declare your real estate assets as a French resident.
A previous wealth tax on securities accounts in Belgium was replaced by the “Solidarity Tax” in October 2019. This applies a flat rate wealth tax of 0.15% on securities accounts that reach or exceed €1 million ($1.06 million).
Countries with No Wealth Tax
Unlike many countries around the world, there are a handful of EU countries that don’t impose a net, nor selected assets wealth tax.
Portugal’s NHR tax regime (non-habitual resident tax regime) allows for wealth tax in Portugal for foreign nationals to be avoided entirely. You also benefit from a low tax rate for capital gains tax and corporate tax. In addition to no wealth tax, Portugal is also one of the best countries with no income tax for foreigners under the NHR tax regime.
You can obtain residency and earn a foreign income tax-free as well as access reduced national tax rates to avoid paying higher taxes on local income, making Portugal one of the lowest tax countries in Europe.
Monaco has been a permanent presence on the tax-free countries list. Not only is it number one of European nations with no wealth tax, but there is also zero income tax, gift taxes, tax on inheritance, or capital gains taxes, ensuring it remains an attractive tax haven for high earners and the ultra-wealthy to obtain citizenship or become permanent residents.
Monaco’s tax benefits also extend to corporations, as one of the best tax-free countries for business, with a 100 percent tax exemption for international companies receiving more than 75 percent of their revenue in Monaco.
Although not in the group of tax-free countries in Europe, Liechtenstein is another low-tax country with no wealth tax. You can reduce your tax burden with low income taxes, and there are also a number of tax exemptions as well as a VAT (Value Added Tax) rate of just 7.7 percent. It’s also one of the best countries for property ownership, with no real property tax to pay.
Greece does not levy taxes on wealth. It’s among the lowest tax countries for individuals who secure a Greece Golden Visa, which provides numerous financial and tax benefits for expats who invest in property in Greece.
Several countries around the world don’t charge a wealth tax. Gulf states in the Middle East with oil wealth, like Bahrain, Kuwait, Oman, and the United Arab Emirates, don’t charge taxes on wealth. A number of Caribbean countries don’t impose wealth taxes or taxes on other assets offshore, such as the Bahamas, the Cayman Islands, Antigua and Barbuda, and St. Kitts and Nevis.
You can also avoid wealth taxes in Pacific islands like Vanuatu and the Solomon Islands, and a disputed territory like Western Sahara.
Things to Consider
Check for other taxes
If you choose to move your wealth overseas, check what additional taxes may be charged. You can avoid net wealth or selected wealth taxes, but some countries may levy inheritance or gift tax. Foreign investment income and national income often have very different rates too.
Consider the region you are moving to
Although Spain has a net wealth tax, this is not country-wide. Regions like Madrid and Andalucía are great places to live for tax purposes, as they no longer charge a wealth tax for tax residents who reside there. You can expect to pay regular taxes like personal income tax and income generated from financial investments.
Frequently Asked Questions about Countries With No Wealth Tax
Which country is completely tax-free?
The country that is completely free of tax is Monaco, which has no inheritance tax, capital gains tax, or wealth tax, as well as a 100 percent tax exemption for corporations that receive more than 75 percent of their revenue in Monaco.
Do any countries have wealth tax?
Some countries that charge a wealth tax are Belgium, France, Norway, Spain, and Switzerland.
Which country has the highest wealth tax?
Switzerland has the highest wealth tax, with a maximum tax rate of 4.77 percent.
Which countries in Europe have no wealth tax?
The countries in Europe with no wealth tax are Portugal, Monaco, Liechtenstein, and Greece.