How many residents in Andalucía own assets worth more than two million euros and where is their money invested?

At first glance of the latest statistics on wealth tax declarations published a few days ago by Spain's Ministry of Finance, it might seem that the number of 'rich' people in Andalucía has fallen. The number of people who reported their wealth fell in 2022 and it did so very significantly; by almost 36%, going from 19,834 declarers in 2021 to 12,707 the following year.

From the first reading of the statistics it would seem that there are fewer 'rich' people, but it would also appear that those who are there have more money. This is because the average wealth declared by each taxpayer has risen from 2.85 million to almost 3.8 million, which represents an increase of over 33%.

The tax office has provided an explanation for these figures. In Andalucía, the 100 per cent tax rebate approved by president of the Junta de Andalucía, Juanma Moreno, which in practice translates into exemption from payment - came into force last year for the 2022 tax return - Andalusians were not taxed on the wealth they had that year. However, although the tax rate in Andalucía is 'zero', the accounting of wealth - the presentation of the declaration - is still compulsory for those who have more than two million euros.

Until 2022, the tax applied in Andalucía to assets from 700,000 euros, except for up to 300,000 euros of the main residence, in line with national regulations - Patrimonio is a state tax although it is ceded to the different regions in Spain.

The reduction in the number of taxpayers who declared their wealth last year is due to the fact that those with less than two million euros are not obliged to account for their assets to the tax authorities, so they will not have done so. And the increase in the average wealth per taxpayer can be explained by the fact that the least wealthy among the rich have disappeared from the statistics. This is the same phenomenon that has already happened in Madrid, the other Spanish region that cancelled the wealth tax, as the tax office has pointed out.

The statistics on wealth tax that have just been published by the tax office with data from the declaration made in 2023 of the assets that were gained in the financial year 2022 also makes it possible to see how the investments of Andalusian high net worth individuals are distributed.

In total, the 12,707 taxpayers accumulated more than 48.23 billion euros. Of this figure, the largest proportion, almost 74.5%, i.e. nearly 36 billion euros - an average of 2.9 million per taxpayer - is made up of movable capital, i.e. financial investments (shares, bonds or deposits) which may or may not be listed. Virtually all wealthy taxpayers have movable investments, but they differ in the type of instruments: deposits are very common, but shares, for example, are much less common.

The wealth of the richest Andalusians includes investments that are not tradable on the stock markets. Within these, the bulk of their savings are made up of holdings in companies that would in any case be exempt from taxation even if the wealth tax were active in Andalucía: these are unquoted companies, most of which are presumably family-owned and whose resources are devoted entirely to an economic activity.

This represents more than 40% of all the wealth of the richest Andalusians, with almost 20,000 million of the more than 48,000 million they own in total - which makes an average of five million per person, because only 3,936 of the nearly 13,000 'rich' declare this type of shares in total.

Within non-tradable assets on the stock market, after shares in family companies, the second most important destination of the wealth of the rich is made up of bank deposits: they have 4.65 million euros there, that is, practically 10% of their total money. Unlike tax-exempt shares, this type of banking product is declared by almost all wealth declarers. Almost all of them have deposits, but only a minority have shares in companies with economic activity, although the volume of investments in the latter is more important.

In movable investments, but only those that are tradable on stock markets -both the stock market and the debt market-, Andalusian millionaires have just over 7,000 million euros saved, i.e. just over 14% of their total assets. Of this figure, 4.3 billion euros, i.e. about 9% of all their money, corresponds to subscriptions in investment funds. But in reality only half of wealthy Andalusians invest in these instruments (specifically, 6,400, meaning that each one has an average of 671,267 euros in this investment channel).

1.5 billion in listed shares, but only 5,000 of these taxpayers have investments in the stock market. And in public or private debt, the 1,271 taxpayers who declare investments in these assets accumulate just under 500 million euros.

Along with deposits, the other most popular investment instrument among high net worth individuals is "bricks and mortar". The vast majority of those who declared their wealth last year own real estate, accounting for 17% of their combined wealth - 8.2 billion euros. Each person has an average of 672,000 euros in real estate assets, the bulk of which is urban in nature. Surprisingly, in a region such as Andalucía, only 3,000 of these rich people declare rural assets with a combined value of 477.6 million euros.