Ireland told a French-style wealth tax will raise just €22m

Added 25th November 2016

Ireland’s controversial plans to impose a wealth tax on its super-rich, similar to other European countries such as France and Spain, may yield just €22m (£18.6m, $23.2m), according to a study by the Economic and Social Research Institute (ESRI).

Ireland told a French-style wealth tax will raise just €22m

The research assessed the potential impact of adopting various European wealth tax structures in Ireland as left-wing parties in the country’s government debate about whether to introduce a such a levy to raise much-needed revenue for the Treasury coffers.

In France, a 0.5% annual tax is applied to relatively high thresholds of €900,000, increasingly gradually to a top rate of 1.5% to anything over €10m.

In 2012, Spain saw an exodus of wealthy expats after tax authorities restored a previously abolished annual wealth tax of 2.5% on worldwide assets valued over €10,695,996.

ESRI found that if such punitive measures were applied in Ireland, the government would make just €22m, as the revenue generated from high net-worth individuals (HNWI) would be modest, the Irish think tank predicted.

Last month, during the country's annual budget, Portugal announced it will introduce a levy of 0.3% a year on properties valued over €600,000.

The move could benefit thousands of British expats living in the EU-member state as, if it is approved by the Portuguese parliament, it will replace a more punitive stamp tax system which applied a 1% charge on homes valued above €1m.

Similarly, South Africa is also comtemplating introducing an additional wealth tax on top of the estate duty that applies a 20% charge to estates with a net value in excess of ZAR3.5m (£205,538, $251,159, €230,831), including all worldwide assets.

Commentators predict that the new payment could take the form of a 0.5% annual tax on all assets with a net asset value over ZAR30m (£1.7m).

This is despite the head of South Africa's most prominent tax-setting committe, judge Dennis Davis, telling local media that if it is introduced the wealth tax is not expected to add more than ZAR5bn to state coffers.

Swiss model

In contrast, the Swiss model, which has a much lower wealth tax and covers a greater range of personal assets, could net the Irish coffers up to €1.3bn in additional funds, noted the ESRI data.

However, this would be based on a significant proportion of wealth tax falling on low and middle-income earners.

For example, in the Swiss region of Schywz, a wealth tax is applied to all individuals with assets, including income and property, exceeding €49,824.

In the other two cantons assessed by the study, individuals with assets of €66,830 and €83,040 were liable for the tax.

The research found that in such cases the tax burden focused on older households and single-adult households as they tended to have more expensive property assets and were often sitting on assets that may have once belonged to two individuals.

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Monira Matin

Senior Reporter

Monira joined International Adviser in March 2016 from Informa Global Markets where she worked as a eurobond reporter for over two years, covering fixed income markets. She has previously held a number of editorial positions covering politics, insurance and technology. Monira has a degree in Journalism and Economics from City University.

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