Madrid introduces a new 20% IRPF deduction to attract foreign investment

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The Community of Madrid has taken a significant step to attract foreign investments by approving a 20% deduction in the regional IRPF quota on Wednesday, June 19. This incentive is aimed at taxpayers from abroad, with the objective of promoting employment and wealth in the region.

The new bill, approved by the government council of the Community of Madrid, establishes a 20% deduction in the regional IRPF quota. This measure applies to investments in various forms of financial assets, such as bonds, securities, treasury bills, shares of listed and unlisted companies, and contributions to limited companies. However, investments in real estate, such as houses and garages, are excluded. The regulation will apply retroactively to all operations carried out since January 1, 2024.

Requirements to benefit from the deduction

To qualify for this deduction, investors must meet certain requirements:

  • Fiscal residency: Maintain fiscal residency in the Community of Madrid for a minimum of six years.
  • Previous residency: Not have been a resident in Spain for the previous five years.
  • Investment destination: Investments must not be in entities domiciled in tax havens or in real estate.
  • Employment relationships: The investor cannot hold executive or management positions, nor maintain an employment relationship with the entity in which they invest.

The bill will be sent to the Madrid assembly for parliamentary processing. With the absolute majority of the popular party in the chamber, the law is expected to be approved in the coming months, thereby consolidating this fiscal deduction that promises to strengthen the Madrid economy by attracting foreign capital and talent.

With this measure, Madrid reaffirms its commitment to creating a favorable environment for foreign investments, encouraging new taxpayers to settle and thrive in the region.

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