Part IV · Tax Regimes · No. 08

Annual wealth taxes

A small group of jurisdictions impose an annual tax on the net worth of resident individuals. The OECD member states that have such a tax today are far fewer than in the 1990s; the design problems are well understood; the political debate over reintroduction is constant.

The rule

A wealth tax is an annual tax on a taxpayer's net wealth — gross assets less liabilities — typically above a threshold. It is distinct from a one-time wealth tax (a capital levy), distinct from inheritance and estate tax (which is imposed once at transfer), and distinct from capital-gains tax (which is imposed on realized appreciation). The wealth tax reaches the stock of wealth, not the flow of income or the moment of transfer.

Jurisdictions that currently impose a wealth tax

As of October 2026, a general annual net-wealth tax exists in a small number of jurisdictions, with narrower asset-specific wealth taxes elsewhere:

• Switzerland — Wealth tax is imposed at the cantonal and communal level, not federally. Rates are progressive within each canton, generally from approximately 0.1% to 1.0% of net wealth depending on residence canton and total wealth. The base for residents is worldwide net wealth, except that foreign real estate and foreign permanent establishments are excluded from the base (though taken into account for the rate). See Switzerland.
• Spain — National wealth tax (Impuesto sobre el Patrimonio) ceded to the autonomous communities, with state-scale rates from 0.2% to 3.5% and wide regional variation. Madrid applies a 100% rebate (effectively no wealth tax for Madrid residents). The national "temporary" solidarity tax on great fortunes (Ley 38/2022; 1.7% to 3.5% on net wealth above €3 million, with credit for regional wealth tax paid) overrides those rebates for the wealthiest; Real Decreto-ley 8/2023 extended it indefinitely, and it applies for 2026.
• Norway — Wealth tax at both municipal and national level. For 2026 the combined rate is 1.0% on net wealth above NOK 1.9 million (NOK 3.8 million for married couples) and 1.1% above NOK 21.5 million; thresholds are adjusted in each annual budget. The tax is the source of recurring political debate and high-profile resident departures.
• France (real estate only) — Since 2018 the impôt sur la fortune immobilière (IFI) taxes net real-estate wealth above €1.3 million at 0.5% to 1.5%. From fiscal years ending on or after 31 December 2026, a new tax on family-controlled passive holding companies (CGI art. 235 ter C) charges 20% a year on the value of "sumptuary" assets they hold — yachts, aircraft, pleasure vehicles, jewelry and precious metals, racehorses, fine wines — where the company has at least €5 million of assets.
• Liechtenstein — Modest wealth tax applied through the income-tax system.
• Argentina — A continuing personal-assets tax (bienes personales), whose rates are being reduced under 2024 legislation, alongside a one-time "solidarity contribution" levied in 2020.
• Colombia — A net-wealth tax made permanent from 2023 for individuals above a UVT-indexed threshold.

Countries that have repealed their wealth tax in recent decades include France (repealed and replaced with a real-estate-specific wealth tax in 2018), Germany (the tax was held unconstitutional in 1995 and has not been reinstated), Sweden (repealed 2007), Denmark (repealed 1997), Austria (repealed 1993), and the Netherlands (replaced with a deemed-return income tax under Box 3 — currently under reform after Supreme Court decisions in 2021 and 2024).

Scope

A wealth tax typically reaches:

• Real estate (residence and investment property).
• Securities (publicly traded and private).
• Cash and bank deposits.
• Cash-value life insurance.
• Interests in closely held entities.
• Tangible personal property — including art, yachts, aircraft, jewelry and watches — although the practical reach of the tax to undisclosed tangible property has always been limited.

Common exclusions or reduced valuations:

• Pension and retirement savings.
• Primary residence (full exclusion or reduced valuation in some jurisdictions).
• Business assets (qualifying operating-business interests, in jurisdictions that exclude productive capital).
• Personal-use household items below a threshold.

Rate and computation

Rates are low in nominal terms compared with income tax — between approximately 0.1% and 3.5% per year on net wealth. The compounding effect over decades is material, but the headline rate is modest. Where the tax exists alongside an income tax with low top rate (Switzerland), the combined burden remains internationally competitive. Where the rate is high (Norway, Spain after the solidarity overlay), the combined burden of wealth tax plus income tax exceeds 50% of investment return for many high-net-worth residents.

The design problem of wealth tax is valuation. Cash and listed securities are easy. Closely held entities are difficult and produce constant disputes. Art and tangible property are valued on declared basis, with audit risk asymmetric: an under-declaration is hard to detect; an over-declaration is rare. Real estate is generally valued at official property-tax-roll values, which can be well below market.

U.S. proposals

The United States has not imposed a wealth tax at the federal level. Constitutional questions exist under the Sixteenth Amendment and under the apportionment requirement of Article I, §§2 and 9 — whether a wealth tax is a "direct tax" requiring apportionment by population. The Supreme Court's decision in Moore v. United States, 602 U.S. 572 (2024), addressed the realization principle in the context of the §965 transition tax and was watched closely for signals on a possible wealth-tax constitutional challenge; the Court resolved on narrow grounds without reaching the broad question.

Federal wealth-tax proposals have circulated in Congress for years. Senator Warren's Ultra-Millionaire Tax Act — introduced in 2019 and 2021 and most recently reintroduced in March 2026 — would impose a 2% annual tax on net worth above $50 million and an additional 1% (3% in total) above $1 billion. Senator Sanders has introduced parallel proposals. None has been enacted. State-level annual wealth-tax bills have been introduced in several states without enactment. In California, Proposition 40 (the 2026 Billionaire Tax Act initiative), a one-time tax of up to 5% on residents worth more than $1.1 billion, is on the 3 November 2026 ballot; its outcome is pending as of this review.

Elections and exceptions

Most wealth-tax jurisdictions offer specialized reductions:

• Cap on combined wealth and income tax. Several jurisdictions cap the combined tax at a percentage of income: Spain limits combined income and wealth tax to 60% of the taxable income base (with a minimum 20% of the wealth tax payable); France's IFI is reduced so that IFI plus income taxes do not exceed 75% of income; some Swiss cantons (for example Vaud) have similar caps.
• Business-asset relief. Operating-business interests held in substance by the taxpayer often qualify for reduced valuation or exemption.
• Lump-sum taxation. Switzerland's impôt à forfait permits qualifying non-Swiss-national residents to be taxed on a deemed living-cost base rather than on actual worldwide income and wealth; the canton-specific regime materially changes the wealth-tax exposure for qualifying residents. See Switzerland.
• Non-domiciled regimes. The United Kingdom's remittance basis for non-domiciled residents was abolished from 6 April 2025, replaced by a four-year foreign income and gains regime for new arrivals and a residence-based inheritance tax test. See United Kingdom.
• Italian flat tax. Italy's Article 24-bis TUIR regime offers new resident-electors a substitute tax on all foreign income at a flat annual amount — €300,000 for those electing from 2026 (previously €200,000, and €100,000 before August 2024), plus €50,000 per family member, for up to 15 years. Electors are also exempt from Italy's taxes on foreign real estate and financial assets (IVIE and IVAFE). See Italy.
• Portuguese non-habitual resident regime. Closed to new entrants from 2024 (with transitional access), and replaced by the narrower IFICI incentive for qualifying research and innovation activities. See Portugal.

Interaction with other regimes

• Income tax. Wealth tax is paid from after-income-tax wealth. Income tax and wealth tax stack, often with combined-burden caps.
• Estate / inheritance tax. Some wealth-tax jurisdictions also impose inheritance tax (France, Spain, Switzerland cantonally); others have repealed inheritance tax (Sweden, Norway).
• Treaty relief. Many European treaties (for example, those concluded by Switzerland and Norway) cover taxes on capital and allocate taxing rights over cross-border wealth. U.S. treaties generally cover income taxes only. The OECD Model includes a "capital" article (Article 22) that is often modified or omitted in bilateral negotiation.
• Reporting / exchange of information. The OECD Common Reporting Standard provides foreign financial-account data that wealth-tax authorities use to verify declarations.

Common planning approaches

• Choice of residence. The principal lever. A high-net-worth taxpayer's choice of jurisdiction has the largest single tax effect, and the wealth-tax exposure is often the deciding variable.
• Substance for business-asset relief. Where business-asset relief is available, structuring holdings to qualify — typically requiring active management role and minimum holding periods — can reduce the wealth-tax base materially.
• Use of insurance wrappers. In some jurisdictions, cash-value life insurance and similar wrappers receive favored valuation or deferral treatment. PPLI is the principal U.S. parallel; foreign equivalents have similar logic.
• Trust holdings. Trusts in jurisdictions outside the taxpayer's residence may move assets outside the wealth-tax base if the residence jurisdiction's anti-avoidance rules do not look through. Look-through regimes (CFC-style rules for trusts; French and Spanish rules on settlements) limit the technique.
• Real-estate location. Real estate is sometimes valued at below-market tax-roll values for wealth tax. The location and assessed value of real estate in the residence jurisdiction is therefore relevant.
• Treaty positioning. Where a tax treaty allocates wealth-tax jurisdiction differently from income tax, the taxpayer's residence in a treaty partner state may produce relief unavailable in a non-treaty jurisdiction.

Recent developments

The Spanish national "solidarity tax on great fortunes" enacted in 2022 was extended indefinitely by Real Decreto-ley 8/2023 and applies for 2026; it is the most prominent recent wealth-tax legislation alongside France's 2026 tax on sumptuary assets held in passive holding companies. The political driver was the perception that the autonomous-community variation in wealth-tax administration (particularly Madrid's rebate) had hollowed out the national tax.

Norway raised wealth-tax rates (introducing the 1.1% top band) and increased the valuation basis for shares in budget legislation for 2022 and 2023; the changes produced a much-reported wave of Norwegian high-net-worth resident departures to Switzerland.

The Netherlands' Box 3 deemed-return regime has been ruled by the Hoge Raad (Supreme Court) to violate the European Convention on Human Rights' protection of property where the deemed return exceeds actual return. Rulings of 24 December 2021 and 6 June 2024 require that the tax be limited to actual return where that is lower. The reform bill (Wet werkelijk rendement box 3), which would tax actual returns, passed the Tweede Kamer in February 2026 but is still pending in the Eerste Kamer; the government has said a 2028 start is uncertain and may slip to 2030.

Under Brazil's 2024 G20 presidency, a proposal (drawing on work by economist Gabriel Zucman) for a coordinated minimum tax of 2% of billionaires' wealth was debated; the November 2024 Rio de Janeiro Leaders' Declaration committed only to "engage cooperatively" to ensure ultra-high-net-worth individuals are effectively taxed. No implementing instrument has been adopted.

Reviewed October 2026