Recently, the Bill PL-3/2024 was published in the Official Bulletin of the Assembly of Madrid, aiming to attract foreign capital and talent to the Community of Madrid through a 20% deduction on the amount of investments made by foreigners who become new tax residents in Madrid.
The main features of this measure are as follows:
- A deduction for investments by new foreign taxpayers (i.e., taxpayers who move to the Community of Madrid from abroad) is established in the scope of Personal Income Tax (IRPF).
- The deduction in the IRPF would be equal to 20% of the acquisition value, including expenses and taxes inherent to the acquisition—excluding interest—of the following assets:
- Securities representing the transfer of own capital to third parties, both traded and non-traded in organized markets.
- Securities representing participation in the equity of Spanish or foreign entities, both traded and non-traded in organized markets.
Requirements for beneficiaries:
- Investments must not be made in the real estate sector or in entities in tax havens.
- The beneficiary’s participation in the investment company cannot exceed 40% of the share capital.
- The beneficiary must maintain fiscal residence in Madrid for 6 years.
- The investment must last for a minimum of 6 years.
The deduction can completely eliminate the regional portion of the tax and will apply to tax periods starting on January 1, 2024, that is, this fiscal year. It is important to note that the deduction is not compatible with the impatriates regime (“Beckham Law”).
Glezco, with you
At Glezco Asesores y Consultores, we are delighted to advise and assist you with the implementation of this new measure. Our Tax & Legal department will provide the necessary legal coverage while Glezco Capital Partners will help you choose the investment that best suits your investor profile.
