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Europe’s wealth tax: Which countries still enforce it?
The debate over taxing the ultra-wealthy has reignited across Europe as discussions center on addressing national debts through wealth-based taxation. Economist Gabriel Zucman recently proposed a 2% minimum tax on fortunes exceeding €100 million, a measure aimed at replacing France’s former solidarity wealth tax (ISF), which was abolished in 2018 and replaced by a property wealth tax (IFI). However, only three European countries continue to apply a wealth tax, and just one is within the European Union.
Spain: The EU’s sole enforcer of a wealth tax
Spain is the only EU member state with an active wealth tax system. Initially abolished in 2008, it was reinstated in 2011 in response to the economic crisis, targeting individuals with net assets exceeding €700,000. In 2022, Spain introduced a temporary solidarity wealth tax on fortunes exceeding €3 million, with progressive rates ranging from 1.7% to 3.5%. This measure underscores Spain’s commitment to wealth-based taxation as a fiscal strategy.
Norway and Switzerland: Wealth taxation beyond the EU
Outside the EU, Norway and Switzerland are the only European nations that maintain wealth taxes. Norway imposes a 0.7% tax on assets exceeding 1.7 million Norwegian kroner (approximately €145,000), generating an annual revenue of 32 billion kroner (€2.7 billion). However, the tax system has become a contentious issue, particularly during recent legislative elections.
Switzerland’s wealth tax varies significantly by canton. For instance, Geneva imposes a 0.6% tax on fortunes between 500,000 and 1 million Swiss francs, while Zurich applies a lower 0.2% rate on the same value range. This decentralized approach reflects Switzerland’s unique federal tax structure.
A fading trend in Europe
While Spain, Norway, and Switzerland persist with wealth taxation, other countries have abandoned the practice over the years. Austria discontinued it in 1994, followed by Germany and Ireland in 1997, Finland in 2006, Sweden in 2007, Greece in 2009, and France in 2018. The shift away from wealth taxes reflects a broader trend of nations grappling with the balance between fiscal revenue and economic competitiveness.