Wealth tax
A wealth tax is a tax on an entity's holdings of assets or an entity's net worth. This includes the total value of personal assets, including cash, bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts. Typically, wealth taxation often involves the exclusion of an individual's liabilities, such as mortgages and other debts, from their total assets. Accordingly, this type of taxation is frequently denoted as a net 'wealth tax'.
, five of the 36 OECD countries had a personal wealth tax.
Proponents often argue that wealth taxes can reduce income inequality by making it harder for individuals to accumulate large amounts of wealth. Many critics of wealth taxes claim that wealth taxes can have a negative economic effect, such as declines in GDP growth or job losses.
OECD countries with a wealth tax
The Global Revenue Statistics Database presents a roster of countries that have documented instances of revenue collected from wealth taxes. A total of eight countries were known to have collected revenue through a wealth tax in 1965. In the ensuing decades, the number of countries reporting wealth tax revenue increased gradually and reached its peak in 1995, with 12 countries reporting revenue generated from this form of taxation.As of 2021, five out of 36 OECD countries implement a wealth tax on individuals.
The five countries are Colombia, France, Norway, Spain, and Switzerland.
In practice
There are jurisdictions of sovereign nation states that require declaration of the taxpayer's balance sheet, and from that ask for a tax on net worth, as a percentage of the net worth, or a percentage of the net worth exceeding a certain level. Wealth taxes can be limited to natural persons or they can be extended to also cover legal persons such as corporations. In 1990, about a dozen European countries had a wealth tax, but by 2019, all but three had eliminated the tax because of the difficulties and costs associated with both design and enforcement. Belgium, Norway, Spain, and Switzerland are the countries that raised revenue from net wealth taxes on individuals in 2019 with net wealth taxes accounting for 1.1% of overall tax revenues in Norway, 0.55% in Spain, and 3.6% in Switzerland for 2017.According to an OECD study on wealth taxes, it is "difficult to firmly argue that wealth taxes would have negative effects on entrepreneurship. The magnitude of the effects of wealth taxes on entrepreneurship is also unclear".
A 2022 study found that wealth taxes are most likely to be implemented in the aftermath of major economic recessions.
In November 2024, G20 leaders agreed to "engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed."
Example countries
Argentina
The official term used to denote the wealth tax in Argentina is "Impuesto sobre los Bienes Personales".On 31 December 2021, Argentina's tax authorities published General Resolution 912/2021, which introduces new modifications to the country's wealth tax.
The modifications made to the wealth tax in Argentina entail an augmentation of the non-taxable minimum to ARS 6,000,000. Moreover, residential real estate assets, wherein the owner's daily domicile is situated, shall not be subject to taxation if their worth equals or falls under ARS 30,000,000 . Additionally, the taxation rate structure has been revised. Assets surpassing ARS 100,000,000 will now be taxed at a rate of 1.50%, while those exceeding ARS 300,000,000 will be taxed at a rate of 1.75%.
Before FY2021, for assets held within Argentina, the tax is progressive from 0.50% on assets above ARS 3,000,000 to 1.25% on assets above ARS 18,000,000. For assets held outside of Argentina, the tax is progressive from 0.70% on assets above ARS 3,000,000 to 2.25% on assets above ARS 18,000,000.
Belgium
The Act of 7 February 2018, which is effectively a "wealth tax", announced an annual tax on securities accounts that imposes a 0.15% annual tax on financial instruments kept in securities accounts that are worth more than €500,000 per account holder.The first taxable period started on 10 March 2018 and ended 30 September 2018, for which the tax had to be paid by 30 August 2019. The second taxable period runs from 1 October 2018 to 30 September 2019. In October 2019, the Belgian Constitutional Court issued a decision annulling this tax on securities accounts, with effect as of 1 October 2019.
However, Belgium now re-introduced the annual tax on securities accounts law with some modifications in February 2021. The Belgian Parliament adopted the adjusted tax on securities accounts law applicable from 26 February 2021, with the first reference period ending on 30 September 2021. A solidarity tax of 0.15% is now applicable on securities accounts that reach or exceed €1,000,000 without regard to the number of accountholders, and the tax amount is limited to 10% of the difference between the taxable base and the threshold of €1,000,000.
Bolivia
In December 2020, the Bolivian socialist government of President Luis Arce approved a wealth tax on resident and non-resident individuals with a net fortune of over 30 million Bolivian Boliviano. The tax is progressive with tax rates in the range of 1.4% to 2.4% and includes both domestic and foreign assets. The tax went into effect from 2020 onwards.Colombia
On 1 January 2019, the Senate passed a tax reform bill that includes a lower corporate tax rate, a new tax rate for financial corporations, and a new wealth tax. For the years 2019, 2020, and 2021, the new wealth tax has been set at 1% for Colombian-resident individuals' worldwide net worth, and 1% for non-resident individuals on Colombian properties only, such as real estate, yachts, artwork, vessels, ships, and other assets with a net equity of at least COP5 billion. Shares in Colombian firms, accounts receivable from Colombian debtors, some portfolio assets, and financial lease agreements are all exempt from the tax. Following the COVID-19 pandemic, the richest Colombians will face higher taxes on wages, dividends, and properties, as well as a one-time "solidarity levy" on high incomes. All of which is part of a new bill that was sent to congress in April 2021. The bill aims to collect about 25 trillion pesos a year through new taxes and budget restraints, equating to 2.2 percent of GDP.On 13 December 2022, the Colombian President Gustavo Petro enacted Law 2277 of 2022, which contains the tax reform proposals previously approved by congress. A new wealth tax will be introduced as a permanent tax on individuals with net worth as of 1 January of the relevant tax year exceeding 72,000 UVT. This amount will be calculated as the aggregate value of assets owned, less the liabilities and debts. The tax will apply to the worldwide assets of resident individuals; nonresident individuals will be subject to wealth tax only on their Colombian assets. The tax rate is between 0 and 1,5% until 2026 and will be between 0 and 1% FY 2027 onwards.
France
Since 2018, France has had a wealth tax based on real estate.It is payable by individuals who own real estate assets with a combined value of more than €1,300,000. French residents with global assets and non-residents who own French real estate may be liable for IFI. For French residents, the figure is calculated on all global real estate assets, and for non-residents, the figure is calculated based on the total value of French property and real estate assets only.
From 1989 to 2017, France had the solidarity tax on wealth, an annual progressive wealth tax on any net assets above €800,000 for those with total net worth of €1,300,000 or more. Marginal rates ranged from 0.5% to 1.5%. In 2007, it collected €4.07 billion, accounting for 1.4% of total revenue.
Italy
Two types of wealth taxes are imposed in Italy.- "Imposta sul valore degli immobile situati all'estero" or "IVIE", is a 0.76% tax imposed on real assets held outside Italy. The values of such assets are determined by the purchase price or current market value. Property taxes paid in the country where the real estate exists can offset IVIE. For real estate owned in a European Union member state and in a country which is a member of the European Economic Area that has an exchange of information agreement with Italy, the wealth tax is based on the cadastral value in force in the foreign country. In instances where there is a lack of cadastral value, the wealth tax is based on the purchase cost of the property resulting or the market value in force where the real estate is located. No IVIE is due if the tax is lower than EUR 200; otherwise, the entire IVIE amount is due. If the real estate properties are subject to a property tax in the country in which they are located, the individual can deduct the amount paid from the tax due in the Italian tax return.
- Another tax, "Imposta sul valore delle Attivita' Finanziarie detenute all' Estero" or "IVAFE", is 0.20% and is levied on all financial assets located outside the country, including, so far as the language seems to imply, individual pension schemes such as 401s and IRAs in the US.
Netherlands