Denmark Pushing EU Towards Implementing a Luxury Tax
EU Wealth Tax: A Fragile and Contested Prospect
The European Union (EU) is facing a critical juncture in its efforts to tax the super-rich, as Spain and Brazil recently launched a platform for action on this issue, opening the door for the EU to join. However, the path towards a comprehensive wealth tax within the EU remains fraught with challenges.
A recent survey among millionaires in G20 countries revealed that three-quarters support higher taxes on wealth, and over half believe extreme wealth is now a threat to democracy. Yet, as of mid-2025, there is no EU-wide wealth tax implemented, and individual European countries have implemented wealth taxes with mixed results.
National wealth taxes, such as those in Spain and Norway, often face significant administrative challenges, including accurate asset valuation and enforcement. For instance, Spain’s wealth tax generated only €632 million in 2023, while Norway’s increase in their wealth tax rate caused wealthy citizens to leave, costing the state substantial revenue.
The UK, although outside the EU, provides a cautionary tale: proposed new wealth tax plans risk encouraging capital flight and reallocating wealth into hard-to-value assets like art to avoid taxation, resulting in economic and revenue impacts. Similar dynamics are relevant in EU countries if they consider wealth tax increases.
Most countries that have tried wealth taxes have since abandoned them or scaled them back due to poor revenue results and avoidance. Switzerland is a notable exception, where a wealth tax coexists with relatively low other taxes and still generates meaningful revenue.
At the EU institutional level, the European Commission’s recent budget proposals (Multiannual Financial Framework 2028–2034) do not include explicit provisions for an EU-wide wealth tax or extreme wealth tax. A consensus on a tax on extreme wealth remains elusive due to objections about infringing upon national sovereignty.
Opposition to a wealth tax is based on risks of capital flight and economic harm, especially among high wealth individuals who may migrate or reorganize assets to avoid taxation. The administrative burden and lack of transparency around valuation of complex and illiquid assets present major hurdles. Some voices view wealth tax proposals as “anti-growth” and risky, potentially reducing investment and employment, although comprehensive economic impact studies are lacking.
In light of converging crises, including rising inequality, climate collapse, democratic erosion, and austerity-driven public underinvestment, the case for taxing extreme wealth has never been stronger. Billionaires and centi-millionaires pay proportionally less tax than ordinary people, and their lifestyles and investment patterns contribute disproportionately to the climate crisis.
To address technical difficulties cited for delaying a wealth tax, EU governments could take steps such as harmonising exit taxes, creating a European register of land and real estate ownership, improving cross-border data exchange, publishing annual distributional accounts of income and wealth, and requiring self-reporting for those with over $100 million in assets.
Civil society organizations and trade unions have twice urged EU governments to agree on bold tax reforms, including an EU-level coordinated tax on extreme wealth. As the leader of Climate Action Network (CAN) Europe, Isabelle Brachet, a former EU advocacy adviser for ActionAid International, emphasizes the need for reform of EU economic governance and a socially just transition.
The only notable movement has been a possible extension of the Carbon Border Adjustment Mechanism (CBAM) to additional sectors, which could compel companies from non-EU countries, including low-income nations like Zimbabwe or Mozambique, to contribute to repaying the EU's Next Generation EU (NGEU) debt. However, taxing the ultra-wealthy remains a critical component of the solution to provide new, sustainable sources of funding.
As the EU grapples with these challenges, it remains to be seen whether a comprehensive wealth tax will become a reality, or if the status quo of fragmented national efforts and significant practical and political resistance will persist.
- Trade unions and civil society organizations, like Climate Action Network (CAN) Europe, have advocated for EU governments to agree on bold tax reforms, such as a coordinated tax on extreme wealth, as a means to fund new, sustainable sources and address rising inequality.
- In the midst of converging crises, including democratic erosion, climate collapse, and austerity-driven underinvestment, proposals for a wealth tax among the ultra-rich garner support from a significant portion of the general population, with over half believing extreme wealth is a threat to democracy.
- The implementation of a comprehensive wealth tax within the European Union faces political and administrative hurdles, as evidenced by mixed results from national wealth taxes, and potential economic risks, such as capital flight and reallocation of assets into illiquid investments, that may impact businesses and overall finance.
