Spain has everything to be the great power of teleworkers, but our wealth tax scares them

It is a new era for workers since the outbreak of the covid-19 crisis. Many companies have decided not to have offices and the relocation of workers has been accentuated. And although the movements are slow, there is a war to attract these types of workers, who are typically highly skilled and well paid.

Spain is an attractive destination but it has a big downside, its tax system. Y Among all taxes, the one most misunderstood by foreigners is that of patrimony, mainly because it does not exist in almost any country in the world.

Attract human capital

In the race to attract teleworkers from all over the world, Spain has very good conditions. The same advantages we have to attract tourism in a normal situation we have them to attract teleworkers: good weather, not very high prices (compared to other developed countries), low crime, very good quality beaches, very interesting tourist destinations, good infrastructure …

In fact, in this race there are already some cities that are in the top. For example, in a survey of 15,000 people of 173 nationalities, the winner came out Valencia. And right after Alicante. And in the top 10 there were also Malaga and Madrid.

That is, we start with an advantage. But we cannot neglect ourselves because we are not the only ones who have this series of characteristics (for example Portugal and Italy have similar conditions) and we have some disadvantages. Mostly tax.

Personal income tax could be more competitive

Our personal income tax, in general, is high. Above all, the marginals in the last sections are quite high and usually the workers who could afford to emigrate are the ones who earn the most money. Spain is no longer attractive in this regard.

Of course, in Spain we have what is known as the Beckham Law, which allows workers who come to Spain for an employment contract to pay only 24% for the first 600,000 euros of salary. Of course, there are exceptions and there has been a recent reform which means that, for example, this law no longer applies to footballers (which is curious because it was done at the time Beckham was coming and that is how the law was known).

Keep in mind that countries like Portugal have a very interesting scheme for expatriate workers Y could make us a tough competitionIt is also a cheaper country than Spain and with a better command of English.

The estate tax scares

However, the main problem is not personal income tax. In the end, all countries have personal income tax and one of the reasons for attracting this type of worker is precisely that they pay taxes in Spain. Successions and donations are not dramatic either, as we are talking about people who normally do not intend to live their entire lives here. And the VAT is similar to other countries.

Nevertheless the wealth tax is a stumbling block. First, only Norway and Switzerland have an equivalent in Europe. Italy and France have something similar but it only applies to real estate. Therefore many foreigners do not understand that of paying an annual tax on the net wealth they have. Y specialized pages in expatriates they make it noticeable when they talk about Spain.

And we are talking about highly qualified workers who come from fairly prosperous countries (no one is going to move from a cheaper country to a more expensive one, no matter how good the weather is). And that implies that they have been able to accumulate assets throughout their working lives that would have to pay taxes, despite the fact that the assets are located in their country of origin: as we already explained, estate tax for residents applies to all your world assets.

In the end, if a teleworker comes to Spain to reside, it is normal for him to live for rent and therefore the main exemption they will enjoy is the exempt minimum of 700,000 euros (which is also lower in Aragon, 400,000 euros, Catalonia and Extremadura, 500,000 euros, and Valencia, 600,000 euros). Some limits that may seem high in Spain but that for people from Germany, the United Kingdom or Sweden may not be so much.

And an added problem is that making this declaration is not easy at all, since the valuation of the assets can be complicated if they are abroad and the banks do not help with their calculation (as they do in Spain). In the end, the cost of the tax must be added the cost of a tax advisor to help file the return.

Possible solutions

What could be done to avoid this panic of foreigners to this tax? There are three solutions. One would be to make a special regime for non-national residents, as we have with personal income tax or as Portugal does with its personal income tax for some special groups of qualified workers. A discount could be applied to the tax or directly eliminated in such cases.

Another possible solution is that For foreign residents the tax only applies to goods and rights located in Spanish territory (as is the case with the tax for non-residents). This would simplify things a lot.

And finally, it could be considered to permanently eliminate (as happened between 2008 and 2010) the wealth tax in Spain. In the end it is a tax with low collection and if what is intended is to prevent inherited and unproductive wealth from spreading throughout generations gift and inheritance tax is a better way.


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