Denmark May Push Europe Towards Implementing a Wealthy Tax Regime
Europe Contemplates Taxing the Super-Rich Amidst Multiple Crises
Europe is grappling with the idea of taxing the ultra-wealthy as a solution to provide new, sustainable sources of funding for essential public services, climate action, and economic recovery.
Spain and Brazil have launched a platform for action to tax the super-rich, opening the door for the European Union (EU) to join this initiative. However, the implementation of a unified wealth tax within the EU faces legal and practical challenges, as the EU as a whole does not currently have such a tax.
The United Kingdom, in particular, has seen a resurgence of discussions about a wealth tax ahead of the Autumn Budget 2025. Proposals include a one-off 1% tax on wealth above £0.5 million or a 2% recurring tax on assets. However, political leaders have given mixed signals, with the UK Prime Minister insisting on avoiding tax increases on modest incomes, while Labour’s Rachel Reeves has ruled out a pure wealth tax on the richest if Labour wins.
Across Europe, the decline in countries with a wealth tax—from twelve in the 1990s to just four in 2025—reflects the difficulties in implementation and limited revenue potential. Wealth taxes generally raise around 0.1% of GDP at best, which limits their fiscal impact compared to other taxes.
Arguments for wealth taxes center on reducing inequality and raising funds for budget deficits. Advocates argue they target the very richest who can afford to pay more and can help finance essential public services.
Arguments against include the risk of capital flight or migration of wealthy taxpayers, economic distortions, administrative complexity and costs, potential negative impact on investment and economic growth, and the possibility of passing these costs on to European consumers, disproportionately affecting those least able to afford it.
A new poll by Greenpeace and Oxfam across 13 countries revealed that 77% of people would be more likely to support a political candidate who prioritizes taxing the wealthy and the fossil fuel industry. Even among millionaires in G20 countries, three-quarters support higher taxes on wealth, and over half believe extreme wealth is now a "threat to democracy."
The Danish EU Presidency has an opportunity to lead in taxing the super-rich, particularly through an update to the EU Directive on Administrative Cooperation (DAC) which governs tax-related information exchange. Civil society organizations and trade unions have urged EU governments twice to agree on tax reforms, including an EU-level coordinated tax on extreme wealth.
However, a consensus on a tax on extreme wealth remains elusive, with the primary objection being that it would infringe upon national sovereignty. To mitigate "technical difficulties" cited for delaying a wealth tax, EU governments could harmonize exit taxes, create a European register of land and real estate ownership, improve cross-border data exchange, publish annual distributional accounts of income and wealth, collaborate with academic researchers, and implement a self-reporting requirement for those with over $100 million in assets.
Isabelle Brachet, who leads the work of Climate Action Network (CAN) Europe on the reform of EU economic governance and a socially just transition, emphasizes that this is about more than just revenue; it is about fairness, sovereignty, and restoring trust. The case for taxing extreme wealth has never been stronger, as Europe faces converging crises including rising inequality, climate collapse, democratic erosion, and austerity-driven public underinvestment.
The only notable movement has been a possible extension of the Carbon Border Adjustment Mechanism (CBAM) to additional sectors, but a unified wealth tax remains a contentious issue. The ongoing debates feature a trade-off between fiscal justice goals and economic consequences, with political willingness and legal frameworks shaping prospects for any future wealth tax implementation.
Trade unions and civil society groups are urging European countries to address the issue of a unified wealth tax, with Isabelle Brachet from Climate Action Network Europe stressing that it's not just about revenue, but also about fairness, sovereignty, and restoring trust.
The arguments for a wealth tax include reducing inequality and funding essential public services, while opponents raise concerns about capital flight, economic distortions, administrative complexity, and potential negative impacts on investment and economic growth.
Business leaders and politicians are grappling with these opposing views, as the implementation of a wealth tax within the European Union faces legal and practical challenges. Finance experts suggest harmonizing exit taxes, creating a European register of land and real estate ownership, improving cross-border data exchange, and implementing a self-reporting requirement for the ultra-wealthy as potential solutions to mitigate these challenges.
