- On 29 September the finance minister announced a temporary solidarity tax on net wealth above three million euros.
- It would apply in 2022 and 2023 and be compatible with the regional wealth tax, partly neutralising the rebates.
- For the families affected, wealth planning requires annual reviews with a tax adviser before the close of each year.
On 29 September 2022 the finance minister announced a temporary solidarity tax on net wealth above three million euros. It would apply for the 2022 and 2023 tax years and be compatible with the regional wealth tax. The announcement came a few days after several regions had rebated their own, and it was read as a response to that move. The announcement therefore contained two key elements: a high threshold and a duration limited to two tax years.
For the vast majority of taxpayers, this news has no direct impact, because the threshold affects a minority. But for families with large assets, and for their advisers, it raised new questions about how it would be calculated, how it would combine with other taxes and what decisions it made sense to take before the close of the year. Understanding the scope and limits of the announcement avoids hasty reactions. The technical details were still pending the rule, so prudence was called for when drawing conclusions.
What was announced
It was a temporary levy that would apply to net wealth above a given threshold for two tax years. Net wealth means what a person owns minus what they owe, and the announced threshold was three million euros.
That it is temporary means that, in principle, it has an expiry date, but experience shows that levies of this kind can be extended or modified, so its duration should not be taken for granted. Nor should its design be considered settled: the calculation details, exemptions and relationship with other taxes are fixed in the rule, not in the announcement. It is worth remembering that net wealth is valued at a given date and that the valuation of certain assets, such as property or shareholdings in companies, follows specific rules.
A response to the rebates
The new tax partly neutralised the rebates of some regions. Being compatible with the regional wealth tax, those living in territories that had rebated theirs could again be taxed on their wealth at state level, and those already paying the regional one had to take into account the relationship between the two.
This changes the calculation for those who had considered moving residence for tax reasons: part of the advantage could be reduced. That is why residence decisions should never rest on a single tax, which may vary over time. It is wise to analyse the whole personal, work and family situation, with a long-term view and professional advice. These interactions between levels of government are complex and in themselves justify professional advice.
Planning with annual reviews
For the families affected, wealth planning came to require annual reviews. Thresholds, valuation criteria and the interaction between state and regional taxes can change from one year to the next, which is why the situation should be reviewed each year with a tax adviser before the close.
A useful annual review includes updating the valuation of assets, checking applicable exemptions and reductions, reviewing the ownership structure and assessing the liquidity available to meet tax payments. The aim is not to look for shortcuts, but to know one’s own situation clearly and comply with obligations. An adviser brings order and avoids surprises. An annual meeting with the adviser, with documentation prepared and an overview of rule changes, is a modest investment compared with the risk of errors.
In wealth taxation, what is planned today may change tomorrow.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
