Tax Hikes For Wealthy in Spain’s 2011 Budget

0


The Spanish government has approved its budget for 2011 which sees tax rises for the wealthy and spending cuts of €122 billion, or almost 8%. The tax rises are expected to boost revenue by €170-€200 million. Readers who are high net worth taxpayers should review their tax planning to see what steps they can take to protect their wealth.

Finance minister Elena Salgado said: “It is the most austere budget for recent years.” Spain is trying to repair its economy having scraped out of recession earlier this year by just 0.1%. The government stood by its prediction that, even with the austere budget, the economy will continue to recover, with growth of 1.3% in 2011 and 2.5% in 2012.

-- Advertisement --

Spain aims to slash its deficit to 6% of gross domestic product (GDP) in 2011, from an expected 9.3% in 2010 and 11.1% in 2009. For 2012, the shortfall is expected to be 4.4%, reaching 3% (the limit set by the EU) by 2013.

The finance ministry stated: “The government adopted a budget that advances fiscal consolidation and lays the groundwork for economic recovery.”

Ministerial expenditure will be axed by an “extraordinarily large” 16%, “the equivalent of what they had in 2006”, Salgado said.

Top Rate Of Tax Up 2%

The top rate of income tax levied by the state will jump 2% from 43%, with the introduction of two additional tax bands from 2011. Annual income from €120,000 to €175,000 will be taxed at 44% and income over €175,000 will be taxed at 45%. Currently there are four tax bands and tax rates, with tax rates starting at 24%.

In certain autonomous regions the top rate of tax could be even higher. This is because Spain’s 17 autonomous communities control 50% of income tax while the state has control over 50%. In Catalonia, the community tax rate will increase to 23.5% for income between €120,000 and €175,000 and to 25.5% for income over €175,000, taking the overall tax hike for a Catalonia resident with income over €175,000 to 49%! Andalucia has raised its community tax rate to 22.5% for income between €80,000 and €100,000 and to 23.5% for income between €100,000 and €120,000.

In May, prime minister Jose Luis Rodriguez Zapatero, warned of a tax on “those who actually have more”. It was dubbed a “millionaire tax” and expected to impact those with a “high economic capacity”. There was much speculation about what this would involve having already raised tax on savings in last year’s budget. Many thought that a wealth tax rate, currently effectively reduced to zero, would be increased but so far this has not happened. There is still room for the government to increase revenue further by reversing the 100% tax credit in the future.

Also in May, the Spanish government passed a €15 billion austerity package which included an average public sector wage cut of 5% and a pension freeze.

One tax cut announced for the 2011 budget is a 10% rise in the reduction of net rental income before tax is due, to 60% from 50%. This will include any rental income from outside Spain except for short-term holiday lets.

An exemption relating to capital gains tax on investment funds was abolished.

Spain is not the only country to increase tax for higher earners next year. In France the top rate of tax is to increase by 1% from 40% to 41% and there will be an increase in capital gains tax by 1%. The sale of moveable assets will go up to 19% from 18% and tax on the sale of immoveable assets from 16% to 17%.

In the UK, those earning over £150,000 suffered a tax increase of 10% from 40% to 50% starting from the 2010/11 tax year.

Indeed, the UK’s top rate of personal income tax at 50% was the highest seen globally and has propelled the UK to fourth position in a league table of EU personal tax rates, according to KPMG’s individual income tax and social security rate survey 2010. Only Sweden, the Netherlands and Denmark outstrip the UK.

In Ireland, the top rate of tax increased by 1% in 2010. Iceland replaced its flat tax regime with a progressive approach raising the top personal income tax rate by approximately 9%. Greece raised its top rate by 5% and Portugal by 3% to 45% on income above €150,000. Sweden taxes its highest earners at 56%.

KPMG’s findings show an upward trend across Europe and other advanced economies where governments are seeking increased revenues from their country’s highest earners. The survey also reveals that the majority of rate movement in 2010 is in Europe, with the highest personal income taxes worldwide paid by EU citizens, where average rates went up by 0.3% over the past year.

The Spanish budget, which was approved by the Council of Ministers on 24th September, still has to go through parliament but it is expected to be passed later in the year.

Tax rises are never good news and the more you earn the higher the rate of tax you have to pay. Following the global financial crisis, governments are focusing on higher earners to bear the brunt of tax rises to help fill treasury coffers.

Matters are not helped for British expatriates in Spain by low bank interest and disappointing currency exchange rates.

Fortunately you can often positively address the situation with confidence with an effective tax planning and wealth management strategy, structured to legitimately limit the amount of tax you pay while at the same time aiming to protect your wealth. A financial manager specialising in these areas such as Blevins Franks can advise you on your specific requirements.

To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com

Read more: http://ewnbusiness.com/231/tax-hikes-for-wealthy-in-spain%E2%80%99s-2011-budget


Recycling for good a cause in Albox

RECYCLING and contributing to a good cause are going hand-in-hand in Albox. The Almanzora-Levante-Velez regional refuse collection service, Ecovidrio and Albox council have presented the...

Ministry of Health Will Finance Help To Quit Smoking

Help to quit smoking  UP to 10,000 people in Murcia – and thousands more across the Costa Blanca, could benefit from a health service decision...

Arrested For Exhibiting Loaded Firearm At La Línea Hospital

The National Police has arrested in La Línea de la Concepción (Cádiz) a man who exhibited a firearm at the hospital in this town...

Morecambe to Mojacar cycle challenge raises £7,000 for Cancer Research UK

A MARATHON Morecambe to Mojacar bike ride has raised just over £7,000 for Cancer Research UK. Lancastrian Ian Hunter succeeded in the challenge he set...

Mijas representatives visit Downing Street to help protect expat rights

MIJAS Resident, Anne Hernandez has received confirmation that Brexpats in Spain will personally hand in a petition to Number 10 Downing Street on October...

UPDATE: Firefighter Injured In Fire At The Guadalhorce Industrial Estate

A FIREFIGHER has been injured in the fire that broke out earlier this afternoon at the Guadalhorce Industrial Estate. An explosion from a nearby caravan...

Mijas representatives visit Downing Street to help protect expat rights

MIJAS Resident, Anne Hernandez has received confirmation that Brexpats in Spain will personally hand in a petition to Number 10 Downing Street on October...

UPDATE: Firefighter Injured In Fire At The Guadalhorce Industrial Estate

A FIREFIGHER has been injured in the fire that broke out earlier this afternoon at the Guadalhorce Industrial Estate. An explosion from a nearby caravan...

Costa del Sol police face drugs charges

TWO Marbella policemen face six years and nine months in jail and a €8.16 million fine for their part in a drugs smuggling operation.  The public prosecutor...

La Sala Trinchera In Malaga Will Host Tribute To Woodstock

We are stardust  IT’S 50 years since the love generation turned up in a small US town called Woodstock to enjoy a few days of great...

HUGE Fire Being Tackled At Car Park Near Malaga Airport

A massive fire has broken out near Malaga Airport. The huge fire is at the Guadalhorce Poligono as flames and huge clouds of black smoke race into...

Costa del Sol – Next Edition of Euro Weekly News Out...

The next edition of the Euro Weekly News will be out this Thursday, in print or online, don't miss out! See more Costa del Sol News

Benidorm blaze

A MASSIVE fire has broken out at the Robin Hood Magic Complex in the Alfaz del Pi area of Marina Baixa, near Benidorm in...

Costa Blanca North – Next Edition of Euro Weekly News Out...

The next edition of the Euro Weekly News will be out this Thursday, in print or online, don't miss out! See more Costa Blanca North...

Constitutive Meeting Of CREAMA Held at Teulada-Moraira Town Hall

A significant Marina Alta club  TEULADA-MORAIRA town hall recently hosted the constitutive meeting of the Marina Alta Consortium for Economic Recovery (CREAMA).  It was chaired by Carlos Mazon, president of Alicante’s provincial...

San Jorge Bridge Breaks The Budget 

REHABILITATING the San Jorge bridge will cost Alcoy city hall more than it originally budgeted for.  The city’s Public Works department was preparing to restore the bridge’s abutments and complete ongoing renovations,...

Nurse arrested On Drug Theft Charges

Drug theft  A NURSE, aged 46, has been arrested by the National Police on charges of allegedly stealing opioid, psychotropic and narcotic drugs from several health centres in the...

Virgen del Pilar’s Day For The Guardia Civil

TEULADA-MORAIRA’S Guardia Civil officers recently celebrated the feast-day of their patroness, the Virgen del Pilar.  The day began with Mass at the Virgen de los Desamparados church...

Ministry of Health Will Finance Help To Quit Smoking

Help to quit smoking  UP to 10,000 people in Murcia – and thousands more across the Costa Blanca, could benefit from a health service decision...

WATCH: Fireball over the Med: did you see it?

A SPECTACULAR fireball passed over the Mediterranean just off the coast of Almeria in the early hours of Sunday morning. SMART project detectors at the...

Toll Road Questions  

WITH less than three months to go before tolls are officially lifted on the AP-7 questions remanin unanswered.  Will they actually become free to use? If not, how much...

Costa Blanca South – Next Edition of Euro Weekly News Out...

The next edition of the Euro Weekly News will be out this Thursday, in print or online, don't miss out! See more Costa Blanca South...

Villena Loses Grant Of Nearly €500,000 To Renovate The Town Hall

Grant lost  VILLENA has lost a grant of nearly €500,000 to renovate the town hall.  When the Valencian regional government approved the hand-out in September 2018...

Benijofar’s Feria Representatives Join Virgen Del Pilar Festivities In Benejuzar

A festive affair  BENIJOFAR’S feria representatives dressed up in their finest to make the short trip to Benejuzar.  There they represented the town in the Virgen del Pilar festivities, that attracted thousands of people...

Vélez River Delta Goes Ahead

“THE largest urban development project in the region” has been given the go ahead in Velez Malaga. The mayor of Vélez-Málaga, Antonio Moreno Ferrer...

Axarquia – Costa Tropical – Next Edition of Euro Weekly News...

The next edition of the Euro Weekly News will be out this Thursday, in print or online, don't miss out! See more Axarquia - Costa...

Chameleon Study In La Herradura

Chameleon study FIFTY volunteers took part in a study to determine the local population of this friendly creature, the chameleon. The hunt for the reptile took...

Refuse Collection Privatisation News Causes Concern in Motril

Load of Rubbish THE mayor of Motril’s news that he is to privatise the refuse collection duties in the town has not gone down well...

Seprona arrest Almuñécar fire suspects

TWO men have been arrested for their part in the fire that ravaged the Loma de Gato – Barranco del Romeral hillside in Almuñécar. The...

Treatment plant resumes construction in Nerja

THE new Nerja Wastewater Treatment Plant (WWTP) will resume construction next week. Works on the last phase of the project will begin next week after...

Recycling for good a cause in Albox

RECYCLING and contributing to a good cause are going hand-in-hand in Albox. The Almanzora-Levante-Velez regional refuse collection service, Ecovidrio and Albox council have presented the...

Morecambe to Mojacar cycle challenge raises £7,000 for Cancer Research UK

A MARATHON Morecambe to Mojacar bike ride has raised just over £7,000 for Cancer Research UK. Lancastrian Ian Hunter succeeded in the challenge he set...

WATCH: Fireball over the Med: did you see it?

A SPECTACULAR fireball passed over the Mediterranean just off the coast of Almeria in the early hours of Sunday morning. SMART project detectors at the...

Costa de Almeria – Next Edition of Euro Weekly News Out...

The next edition of the Euro Weekly News will be out this Thursday, in print or online, don't miss out! See more Costa de Almeria...

Dead Whale Washes Up In Mojacar

THE remains of a dead whale washed up on the Mojacar shoreline on Friday.  British volunteers with the Equinac marine life rescue association, Alex Lawson and Clare Flatters-Cooper, and Local Police...

Motorbike mania in Mojacar

MOJACAR Playa has been reverberating to the roar of motorcycle engines this weekend as the town hosted a gathering of some 3,000 bikers from...

Mallorca – Next Edition of Euro Weekly News Out This Thursday!

The next edition of the Euro Weekly News will be out this Thursday, in print or online, don't miss out! See more Mallorca News

Rats cause IT chaos in Mallorca

Rats cause IT chaos in Mallorca THE Andratx Local Police is offline. For a week now, officers have had to carry out all the formalities...

Man tries to steal famous Ale-Hop cow in Palma

THE Life size mascot parked outside stores of novelty and gift store Ale-Hop has long been a recognizable sight along Spain’s high streets. It has...

Hospitalised after blaze Marratxi

TEN people suffered smoke inhalation and one has sustained mild injuries in a fire at two warehouses on the industrial estate in Marratxí.  The fire started at around 8.15 am on Monday morning in...

GENDER-VIOLENCE claims new victim

A 59-year-old German woman died on Sunday morning after being stabbed in the chest and abdomen by her partner, a Spaniard, also 59. Ika Hoffmann,...

Baywatch wannabe in Cala Millor

A BOGUS lifeguard has been arrested in Cala Millor. The man was allegedly pretending to be a lifeguard even though he had no paperwork or...

Brother and sister found dead at home in Tenerife

A MAN and a woman have been found dead at a house in Tegueste in Tenerife. Both in their sixties, the pair are reported to...

Series of earth tremors hit Canary Island of El Hierro

THE Canary Island of El Hierro was shaken by an earth tremor that reached a magnitude of 5.7 on the Richter scale.  The quake was...

Arrested for 2009 murder in Tenerife

A MAN, aged 44, has been arrested for an alleged murder of a woman who disappeared in 2009.  The arrested man is at present serving...

Gran Canaria Fireman suspended for speaking to press

THE President of a firefighters’ union has been suspended without pay for two days for talking to the press.  Pablo Gonzalez is a working fireman...

Photographer tricked children into porn images in Spain

A PROFESSIONAL photographer has been arrested for allegedly tricking 43 children into creating pornographic material.  He offered on the Internet an "artistic collaboration" consisting of...

Cricket Hero Ben Stokes Smashes The Sun For Six

Caption.Credit Flickr   Ben Stokes one of England's  greatest all round cricketers of all time has gone to twitter to slam articles written about his family...

Gibraltar Airport forced to close and flights cancelled or diverted

FOR the third time in less than a month the airfield in Gibraltar has been closed and flights disrupted or cancelled. There is a dispute...

Is Gibraltar a Colony and should sovereignty be handed over to...

IN the eyes of both Britain and Gibraltar its status is quite clear and it is defined as an Overseas Territory which has direct...

Brand new Brexit Office opens in Gibraltar

IN order to show that despite the fact the Rock as a whole is against Brexit, the Government of Gibraltar has today (October 1)...

Boris Johnson says “Gib Support Is Rock Like”

Albert Isola, Minister for Finance for Gibraltar has attended the Conservative party conference as Fabian Picardo Gibraltar PM couldn't attend as tonight he appears on TV programme question...

Reconstructing the past of Gibraltar

THE history of Gibraltar goes back to Neanderthal man and new discoveries coupled with new techniques are allowing for even more to be known...

Key terrorist member arrested in Algeciras

A STATEMENT issued by the National Police has confirmed that a 51 year old man has been arrested on charges of terrorism glorification and...

LEAVE A COMMENT

Please enter your comment!
Please enter your name here