Spain Has a Wealth Tax — So Why Isn’t the Economy Collapsing?
Dr. Adam North outlines the qualities of Spain's successful wealth tax and what the UK could learn from it.
In this new series for The Rose, I want to add to our previous discussion on a UK wealth tax. I’ll explore the case for a UK wealth tax by breaking down the key arguments against it and offering evidence for why we believe it’s a vital policy tool for rebuilding Britain’s economic and social contract.
In this opening article, I want to start with a simple question: If wealth taxes are so harmful, how do we explain Spain?
We are often told that implementing a wealth tax would trigger a financial apocalypse—that the wealthy would flee, capital would vanish, and entire cities would crumble under the weight of economic decline. Critics would have us believe that the most expensive land in Madrid and Barcelona would quite literally tear itself from the ground and scampering off to Monaco or Saint Lucia.
And yet, none of that has happened. Spain’s “featherlight” wealth tax has been a great success and it has one of the strongest growth records in Europe.
Taxing Wealth — and Growing Anyway
As wealth taxes continue to ignite political debate across Europe, Spain stands out as a success story. Despite maintaining one of the continent’s most progressive wealth tax regimes, Spain was one of the fastest-growing economies in the eurozone in 2024 and is forecast to continue this trend in 2025.
Far from deterring growth or driving capital flight, Spain’s experience shows that a well-calibrated wealth tax can coexist with economic dynamism, strong investment, and social stability.
A Closer Look at Spain’s Wealth Tax
Known as the Impuesto sobre el Patrimonio, the wealth tax applies to individuals with assets above certain thresholds. It is implemented nationally, but with regional flexibility. While each autonomous region of Spain applies the tax differently, the national framework includes:
Exemptions of up to €700,000, plus a further €300,000 for the main residence.
Tax rates ranging from 0.2% to 3.5%, depending on total wealth.
A "60% rule" which ensures total income and wealth taxes paid do not exceed 60% of a taxpayer’s annual income.
The wealth tax was reintroduced nationally in 2011 during the financial crisis and remains in force today, with some regions such as Madrid applying deductions and others (like Catalonia and the Balearic Islands) enforcing it more robustly.
Crucially, Spain has supplemented this tax regime with robust income taxation, corporate tax reforms, and investment incentives such as the so-called Beckham Law, which provides favourable treatment for expatriates working in the country.
Growth in the Face of Taxation
In 2023, Spain’s GDP grew by 2.5%, outpacing Germany (0.2%), France (0.9%), and Italy (0.8%). The Spanish economy grew 3.2% in 2024, making Spain one of the fastest-growing economies in Western Europe. This trend is expected to continue throughout 2025.
Much of this growth stems from Spain’s strong tourism recovery, its green energy investment, and a resilient export sector. But what matters most in the current debate is this: there is no evidence that Spain’s wealth tax has stunted its growth, discouraged business, or triggered widespread capital flight.
If anything, the Spanish case suggests the opposite: taxing wealth modestly and transparently can enhance fiscal stability while supporting equitable growth.
Lessons for the UK and Beyond
In the UK, proposals for a wealth tax are frequently met with dire warnings about capital flight and harm to innovation. Yet the evidence from Spain suggests that a carefully designed wealth tax—especially one targeted only at the ultra-wealthy—can coexist with strong economic performance.
Of course, Spain’s model isn’t perfect. Regional variation creates inequalities in enforcement, and not all wealth is captured equally. Additionally, the Spanish wealth tax currently only generates around approximately €700 million a year (data from 2023), but it offers a compelling starting template: start high, target narrowly, and embed safeguards. This start normalises a wealth tax and then enables it to be expanded over time.
Moreover, public attitudes in the UK appear increasingly favourable toward taxing extreme wealth. A recent Oxfam UK survey found that three-quarters of the British public support increased taxation of the ultra-rich as an alternative to spending cuts. Hell, even the wealthiest 6% of Brits support it!
Conclusion
Spain challenges the myth that taxing wealth is an economic death sentence. Instead, it provides a clear example of how a wealth tax can be both fiscally responsible and politically viable.
As Britain grapples with inequality, underfunded public services, and mounting fiscal pressures, we can no long ask whether we can afford to tax wealth—but whether we can afford not to.
In the next article in this series, I’ll explore how the UK’s own historical tax system once relied far more heavily on wealth, and why we moved away from it. Spoiler: it wasn’t because it didn’t work.
