Wealth Taxes and Their Implications for Banking and Asset Structuring

Wealth taxes — levied annually on the net value of an individual's assets rather than on income or capital gains — have re-emerged as a significant policy discussion globally. While most major economies do not currently have a general annual wealth tax, several important jurisdictions do, and the political direction in a number of countries suggests expansion rather than contraction of wealth taxation over the coming years. For internationally mobile HNW individuals, understanding the current landscape and its implications for banking and asset structuring is important planning intelligence.

The Current Wealth Tax Landscape

Spain: Impuesto sobre el Patrimonio

Spain has one of the most significant wealth taxes among major European economies. The Impuesto sobre el Patrimonio applies annually to the net value of assets held by Spanish residents (and non-residents on Spanish-sited assets). The national rate ranges from 0.2% on the first bracket to 3.5% on assets above approximately €10.7 million. An individual with €5 million in net assets faces approximately €50,000–80,000 per year in wealth tax before regional variations.

Key exemptions:

• Primary residence: exempt up to €300,000 (varies by region)
• Qualifying family business assets: exempt (subject to conditions including active management, majority family ownership, and no passive income exceeding 50% of total income)
• Pension rights: exempt
• Certain listed company shareholdings

Bank account treatment: All bank accounts and investment assets held by Spanish residents are included in the wealth tax base. This includes foreign bank accounts — Spanish residents must disclose foreign assets via Modelo 720 (for assets exceeding €50,000) and include them in wealth tax calculations.

Madrid and Andalusia: These regions have historically offered a 100% wealth tax credit, effectively eliminating wealth tax for their residents. This drove significant relocation of HNW individuals to Madrid and the Costa del Sol. The national Solidarity Tax (Impuesto de Solidaridad de las Grandes Fortunas), introduced in 2022 and extended, was designed to counteract this regional exemption for assets above €3 million, though its continued application is subject to political developments.

Norway

Norway's annual wealth tax (formuesskatt) is levied on the net value of assets at year-end. For 2026, the standard rate is 1.0% on net wealth above NOK 1.9 million (approximately £140,000), rising to 1.1% on net wealth above approximately NOK 21.5 million. Asset valuation rules vary by asset class (for example, primary residences and listed shares are valued at a discount to market value). Norway is notable for having one of the highest effective wealth tax rates in the developed world for liquid assets.

The wealth tax implications are a significant driver of Norwegian HNW emigration — most notably to Switzerland, which has attracted a number of Norwegian high-profile individuals.

Switzerland

Switzerland's wealth tax (Vermögenssteuer/Impôt sur la fortune) is levied at the cantonal level. Rates vary significantly by canton — Zug is the lowest, with effective rates around 0.1–0.2% on net assets. Zürich and Geneva are higher. Importantly, Swiss wealth taxes apply to worldwide assets for Swiss residents but are generally low compared to other European jurisdictions. This is one reason Switzerland attracts wealthy foreign residents, particularly from high-wealth-tax European countries.

France: Impôt sur la Fortune Immobilière (IFI)

France abolished its general wealth tax (ISF) in 2017 and replaced it with a property-only wealth tax (IFI). The IFI applies to net real estate assets (net of mortgages) above €1.3 million, with rates from 0.5% to 1.5%. Financial assets (bank accounts, securities, funds) are explicitly excluded — the IFI is purely a property wealth tax.

For UK residents considering a French property, the IFI on a €2 million net property position would be approximately €8,500 per year — a manageable cost but one that should be factored into the investment calculation.

UK: No Wealth Tax (Yet)

The UK does not currently have a general annual wealth tax. Periodic political discussion occurs — most notably a 2020 Wealth Tax Commission report recommending a one-off wealth tax on assets above £500,000 as a Covid recovery measure — but none has been implemented.

The closest UK equivalent is Council Tax (local property tax), Inheritance Tax (on death), and the Annual Tax on Enveloped Dwellings (ATED), which targets residential property held in companies above £500,000. The effective IHT rate of 40% on estates above the nil-rate band can be considered a form of deferred wealth tax.

United States: No Federal Wealth Tax

The US has no federal wealth tax. Various Democrat proposals (most notably Senator Elizabeth Warren's annual 2–3% wealth tax on net wealth above $50 million) have been introduced but not enacted. The Net Investment Income Tax (NIIT) at 3.8% on passive investment income and gains is the closest equivalent at federal level, alongside state-level taxes in California and elsewhere.

Implications for Banking and Asset Structuring

Location of Bank Accounts Matters

Where you are tax-resident is the primary determinant of wealth tax liability, but location of assets can also be relevant:

• Non-resident Spanish-sited assets are subject to Spanish wealth tax (including property and bank accounts at Spanish banks held by non-residents)
• French IFI applies to French real estate even for non-French residents

For clients considering Spanish property investment, assessing wealth tax implications as part of the investment analysis is essential. A €2 million Spanish property held by a Spanish-resident investor adds approximately €18,000–22,000 per year to their annual wealth tax bill.

Mortgaging Assets to Reduce the Base

In jurisdictions that allow deduction of liabilities (Spain, France, Norway), leveraging real estate assets with mortgages reduces the net wealth tax base. A €2 million property with a €1 million mortgage is assessed at €1 million for wealth tax purposes.

This creates an interesting alignment between wealth tax planning and investment leverage — a leveraged property position both amplifies returns and reduces the wealth tax base.

Family Business Exemptions

Most wealth tax regimes include exemptions for qualifying family business assets. In Spain, shares in an actively managed family business where the owner draws a salary exceeding a minimum threshold may be exempt. Strategic structuring of business assets to qualify for these exemptions can substantially reduce the wealth tax liability.

Banking implication: for exempt assets to qualify, the business must be active and the shareholder must be demonstrably engaged. Passive holding companies managed by nominee directors generally do not qualify for the exemption.

Pension Assets Are Typically Exempt

Defined contribution pension funds, SIPPs, and foreign equivalent pension vehicles are generally exempt from wealth taxes in most jurisdictions. For individuals in high-wealth-tax countries, maximising pension funding reduces the assessable base. This is consistent with the UK's pension contribution incentives and the broad direction of pension planning in most HNW portfolios.

Spain: Optimal Residency Choices

For HNW individuals considering Spanish residency (the Spanish Golden Visa route closed on 3 April 2025, so residency must now be established by other means), residency in Madrid or Andalusia previously offered effective wealth tax immunity. Following the Solidarity Tax, this advantage is partially eroded for assets above €3 million, but regional variations remain significant. Consulting a Spanish tax adviser before establishing residency is essential.

Monitoring Future Wealth Tax Proposals

Several themes are likely to shape wealth tax policy over the coming years:

• OECD/G20 minimum wealth tax discussions: Parallel to the corporate minimum tax framework, international coordination on minimum wealth tax rates has been proposed (most notably in a 2024 EU report from economist Gabriel Zucman). Implementation remains uncertain.
• UK inheritance tax reform: The UK's IHT regime is under ongoing review. The proposed inclusion of pension assets within IHT from 2027 represents a significant change.
• Increased transparency: CRS and beneficial ownership registers make wealth more visible to tax authorities than ever before. This increases the political feasibility of wealth taxes, as the "where do you assess it?" objection becomes easier to answer.

Tax laws, wealth tax rates, and exemptions are subject to change. This guide reflects the position as of 2026. Always seek advice from qualified tax advisers in your country of residence and in each jurisdiction where you hold significant assets before making wealth planning decisions.

How Global Investments Can Help

Global Investments supports HNW clients in understanding the full financial picture of international property investment, including wealth tax implications across the international markets we work in. Our network of specialist tax advisers can provide jurisdiction-specific analysis and help ensure your banking and property ownership structures are tax-efficient for your specific circumstances. Contact us to discuss your requirements.