New exit tax on shares aimed at the wealthy

A NEW exit tax on shares owned by people departing Spanish shores has been brought in.

It will only target the wealthy, mainly people moving to tax havens, but will see shareholders taxed on ‘gains’ on shares’ value whether they sell them or not.

Mariano Rajoy, President of the Spanish Government, is forging ahead with next year’s promised fiscal reforms which come into effect on January 1. The new exit tax  applies to those who were tax residents for 10 of the last 15 years and possess stocks and shares worth more than €4 million or €1 million, should this represent a holding of more than 25 per cent.

They will now pay the difference between purchase price and current value even though the holdings are not sold.

This new regulation applies only to stocks and shares and is aimed at the large fortunes that invest in Spain before moving on to seek more favourable fiscal conditions else-where. Spain’s Finance Ministry pointed out that it is similar to others in Holland, France, Germany, Denmark and the US.

To divest the exit law of punitive overtones, the tax will be waived when the move is made to another EU country. If, 10 years later, the taxed stocks and shares have not been sold, Spain’s tax authorities will also repay the amount paid. Nor will the new law affect taxpayers who relocate for employment reasons on condition that the move is not to a tax paradise.

Taxpayers of more modest means will receive an average reduction of 12.5 per cent on what they now pay, although Hacienda will feel the pinch and collect 8.6 per cent less in 2015 and 4.7 per cent in 2016. This will reduce its IRPF income to below 2010 levels.

The principal corpo-ration tax will fall from the current 30 per cent to 28 per cent and capital gains tax, and tax on savings will be reduced to between 19 and 23 per cent. Tax bands have been modified and even higher investments should feel some benefit.

Rajoy and his Finance minister Cristobal Montoro have ignored Brussels’ urging to increase the IVA added-value tax and plan at least one reduction.  The 21 per cent charged on plants and flowers will be lowered to 10 per cent following complaints from the sector after sales plummeted by half since the new rate was introduced.  Brussels has yet to comment.