European Union

Written by Pieter Baert.

Amid growing concerns about wealth concentration and fiscal strain, debates on the taxation of ultra-high-net-worth individuals have intensified in (international) taxation forums. The European Parliament’s Subcommittee on Tax Matters (FISC) is due to hold a public hearing on this topic on 11 December 2025.

Rethinking taxation – From income to assets

As governments across the EU are facing mounting expenditure pressures – including increased demands for defence – the debate over taxing ultra-high-net-worth individuals has gained additional momentum both in the EU and globally. This has prompted governments to pay renewed attention to the balance between taxing income and taxing assets.

A degree of progressivity is built into most EU Member States’ personal income tax systems, with higher rates applied to higher income brackets, although top rates have generally declined in recent years. Against this backdrop, the debate increasingly extends beyond labour-based personal income taxation to a wider range of fiscal instruments, including capital gains, property, gift, inheritance and wealth taxes. Most EU Member States’ tax systems tax capital income separately from labour income, and at more beneficial rates. In many jurisdictions, income from dividends and capital gains is indeed taxed more lightly, a practice commonly justified by the aim of promoting investment and acknowledging the higher risk and greater mobility associated with capital. However, such preferential treatment may weaken both horizontal and vertical equity within the tax system.

Rather than increasing taxes on the transfer of wealth (inheritances), on income derived from wealth (such as dividends), or on realised capital gains, the concept of a recurrent net wealth tax – levied annually on an individual’s total assets minus debt – has drawn renewed scrutiny, including from the IMF, the OECD and the European Commission. Supporters argue that a net wealth tax offers substantial revenue potential and can help strengthen social cohesion by narrowing wealth disparities within the EU (see Figure 1). Additionally, unlike conventional capital gains taxes, which generally are only triggered upon the realisation of gains, a net wealth tax can effectively capture the taxation of unrealised capital gains, thereby minimising avoidance through deferral strategies.

Figure 1 – Share of net personal wealth (total assets minus debt) held by top 1 %, EU, 2003/2013/2023

At the same time, several potential drawbacks to a wealth tax have been identified. These include the risk of fiscal flight, with (highly mobile) individuals relocating, the potential for reduced investment and the risk of tax base or scope creep, where the tax may, over time, cover a wider segment of the population than initially intended. Other issues are liquidity, as there may be cases where affected taxpayers may struggle to pay the tax without liquidating assets, and how to account for capital losses within such a tax.

Net wealth taxes are not a novel concept. In 1990, 12 OECD countries, including several in Europe, had such taxes in place. However, over the following decades, many of these wealth taxes were gradually phased out and replaced with narrower alternatives, such as (recurrent) taxes focused exclusively on residential property. While the reasons for these changes vary, a common challenge tended to be the limited and often declining revenue generated by wealth taxes, which typically accounted for a very small share of overall tax revenue, combined with sizeable administrative costs. The limited revenue was often attributed to factors such as the tax’s design as well as taxpayers’ ability to avoid the tax by moving their assets abroad. However, differences between countries in wealth concentration and varying fiscal burdens on high incomes mean that the feasibility, revenue potential, and likely behavioural responses to a net wealth tax could vary substantially across Member States.

Today, Spain is the only EU Member State with a net wealth tax (Impuesto sobre el Patrimonio). While regional variations may exist, a general exemption of €700 000 per person applies (plus an additional exemption for the primary residence up to €300 000), with progressive tax rates ranging from 0.2 % to 3.5 %. Additionally, Spain introduced an additional temporary tax on large fortunes (Impuesto temporal de Solidaridad de las Grandes Fortunas), targeting individuals with wealth above €3 million. The taxes raised €2.2 billion in total in 2023.

G20 developments

At the request of the Brazilian presidency of the G20, Professor Gabriel Zucman – head of the EU Tax Observatory – presented a blueprint for a coordinated minimum effective taxation standard for ultra-high-net-worth individuals at the G20 Finance Ministers meeting in Rio in July 2024. Under the proposal, individuals with more than US$1 billion in wealth would be required to pay at least 2 % of their wealth in taxes each year (if they already pay an amount equal to that via income tax, they would consequently not pay additional taxes under the proposal). The 2 % rate would act as an international norm between participating countries, and countries would remain free to design their own tax systems on how to achieve this. Such an approach would require international coordination to establish a common methodology for measuring wealth, including for hard-to-value assets such as unlisted equity or art.

Zucman maintained that this was possible, referring to the (rapid) progress achieved under the landmark OECD Two-Pillars agreement, which included a minimum corporate tax on multinationals. Next to a minimum tax, Zucman puts forward alternative measures that can be introduced more quickly and without the need for (extensive) international coordination, such as anti-abuse provisions to prevent the avoidance of dividend taxation by using holding companies and raising the top statutory marginal tax rates on income.

In November 2024, the G20 leaders announced they would seek cooperation to ensure that ultra-high-net-worth individuals are taxed effectively, possibly by ‘exchanging best practices, encouraging debates around tax principles, and devising anti-avoidance mechanisms, including addressing potentially harmful tax practices’, and encouraged the OECD’s Inclusive Framework to consider working on this.

The European Commission has launched a study on the effectiveness of wealth-related taxes targeting ultra-high-net-worth individuals in both EU and non-EU countries. It is expected to be published by the end of 2025.

Read this ‘at a glance’ note on ‘Taxation of ultra-high-net-worth individuals‘ in the Think Tank pages of the European Parliament.

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