Spain and Colombia, the only countries where income from capital is taxed more individually than income from work


Capital income has a lower real tax rate (ETR) than that levied on workers’ wage income in most of the countries of the Organization for Economic Cooperation and Development (OECD), which could have “considerable” impacts on the proportionality of the tax system or tax exile.

As revealed by an agency report published this Monday, “dividend income and capital gains generally have a lower ETR than salary income at the individual level”, which benefits people with high incomes and generates “distortions”. .

The OECD has defined capital income as those derived from the sale of assets or investments such as those made on the stock market or in the real estate sector. On the contrary, wages come from salaries received for work performed.

“The differentiated tax treatment between income from capital and work affects the efficiency and equity of tax systems”, has summarized the OECD, since it can happen that two citizens, despite receiving the same income, must pay different taxes quantities due to their different origin.

Capital income tends to be concentrated in wealthier households, so these types of taxpayers benefit “disproportionately” from the preferential treatment of capital income, which “reduces” tax fairness at the vertical level.

The Paris-based organization has ensured that, of the 38 member countries, only in Spain and Colombia are capital income taxed at an individual level more than those originating from work ‘per se’. By contrast, long-term capital income is fully exempt in Turkey, Luxembourg and Belgium.

In most of the nations analyzed, there is no tax treatment that substantially distinguishes between both types of income, although in eleven, such as Australia, Colombia, Luxembourg, Israel, France, Switzerland or the United States, capital income Long-term loans are taxed more favorably than their short-term counterparts, the document noted.