Spain’s southernmost autonomous community, and Marbella in particular, is popular for many reasons for international buyers, but new long-awaited reduced tax laws now make it even more appealing.
This will no doubt be music to the ears of the many wealthy residents whose mansions overlook manicured private golf courses and whose superyachts bob gently in playgrounds of excess such as Puerto Banús. But park the Ferrari for a second, because so far-reaching are changes in the tax laws that even ‘normal’ people may stand to benefit too.
The result could be an influx of financial immigrants who previously looked to enjoy many of the fiscal benefits of living in Monaco or Andorra, without now giving up the cultural, culinary and climatological benefits of life in Andalucía.
The idea is to ensure the happiness and stability of current residents so they decide to stay, and also attract a new wave of people keen to set up home and be rewarded for the privilege. Sure, they may not contribute as much as before to the public coffers but they will spend the money anyway, help local businesses to thrive and Andalucía will benefit even more than before.
Economists and politicians have been debating the fiendish mores of consumers, savers and tax-gatherers for as long as trade has existed. The eclectic architecture dotted throughout Andalucía’s eight provinces of Almería, Cádiz, Córdoba, Granada, Huelva, Jaén, Málaga and Sevilla bear magnificent witness to a rich history of ups and downs and regime changes in this particular part of the world.
The scale of tax changes suggests that the current incumbents are keen to safeguard their own rich legacy.
Taxes don’t have to be taxing
The headlines are simple, and a few key changes underline the scale of the changes:
Inheritance and Gift Tax
- 99% reduction in inheritance and gift taxes for spouses, parents and children
- A €1 million deduction per beneficiary, which effectively eliminates inheritance tax for most people
- Transfer or real estate by deed will be just 1%, not the usual 8-10% levied on other types of transfer
- Align rates with Madrid, which currently has the lowest in Spain
- Reduce number of tax bands and rates for low and high earners over the next 4 years
Investment and Capital Gains Tax
- Maximum rate of 23%
- Residential property income taxed at 19%
- Personal pension income taxed as low as 6%
- Due to be eliminated in 2020
Together, these measures are certain to cause people from all walks of life to prick up their ears, grab a calculator and start perusing the real estate portals.
Of course, Andalucía is already highly appealing. When you consider its great beaches, sports facilities, social hubs, fantastic biodiversity and natural resources, mountain ranges, restaurants, water sports, traditional villages, glittering retail hubs, cultural gems and a rich history in art, music, sculpture and architecture, you could argue that Andalucía already has more than enough charms to appeal as an unbeatable place to live.
Add lower taxes to the list and Andalucía could be set to become the first Tax Haven (or Low Tax Region, anyway) to offer it all. For a lot less.
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