(Repeats Wednesday's story without changes)
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Spain launched new wealth tax in December
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Regional election due in Madrid, where many wealthy live
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National vote later this year could determine tax's fate
By Corina Pons
MADRID, May 17 (Reuters) - For serial entrepreneur Martin Varsavsky, the outcome of elections in Spain this year will determine whether he stays in Madrid.
The Argentine-born founder of five "unicorns" - start-ups worth more than $1 billion - is one of 27,000 millionaires or billionaires living in Spain who were blindsided by a "solidarity" tax on the wealth of the rich introduced in the final days of 2022.
The debate over whether the richest 1% should pay more to government coffers to help society cope with the cost-of-living crisis or if the levy will drive away entrepreneurs and investment is dominating regional elections this month in Madrid, home to about half of the individuals liable to pay it.
The outcome of a national vote later in the year - which will either oust the ruling Socialists or return them to power - will more likely determine whether this temporary tax of as much as 3.5% on fortunes greater than 3.7 million euros ($4.1 million) will be made permanent after 2024.
"It's something we've discussed in the family and it depends on whether the tax is made permanent," Varsavsky said of whether he would stay in Madrid or move to Germany or Italy to avoid paying an additional 2.75% on his capital each year.
"This measure has already had an effect. Friends of mine who were thinking of coming to live in Spain are no longer coming."
Spain already had a wealth tax which gave regional governments the power to apply exemptions. Madrid, which in recent years has vied with Miami to attract Latin American fortunes, has offered its residents a 100% discount since 2008.
However, the latest tax, introduced by the national government on Dec. 27 and which took effect this year, does not allow for regional exceptions.
Varsavsky, who is best known for founding and selling the Spanish telecoms company Jazztel to Orange and now runs Inception Prelude Fertility, one of the largest fertility services providers in the United States, is not the only disgruntled taxpayer.
Madrid's wealthy have been talking to advisors since January about options to avoid paying the wealth tax in future, nine sources ranging from lawyers and tax advisors to private bankers told Reuters.
They have an ally in Madrid's President Isabel Ayuso, from the conservative People's Party (PP). She is challenging the wealth tax in court while also pledging to cut local income taxes by 0.5% if she wins reelection.