B Law & Tax
08 January 2024

Tax Advisor: Tax Reforms in Madrid for 2024: Changes in the Wealth Tax (IP) and Personal Income Tax (IRPF)

The Community of Madrid has approved Laws 12/2023 and 13/2023, both dated December 15, introducing modifications with effects from 2023 that impact, respectively, the Wealth Tax (IP) and Personal Income Tax (IRPF).

The modification in the Wealth Tax (IP), approved by Law 12/2023, implies the suspension of the regional 100% discount on the IP quota during the validity of the Temporary Solidarity Tax on Large Fortunes (ITSGF).

Instead of this discount, a reduction in the quota will be established, which will be the difference between the gross quota of the IP, decreased by the joint limit IRPF-IP, and the total gross quota of the ITSGF, decreased by the joint limit IRPF-IP-ITSGF. This measure arises in response to the recent ruling of the Constitutional Court 149/2023, dated November 7, which rejected the constitutional challenge presented by the Community of Madrid against the ITSGF. The purpose is for taxpayers with a wealth exceeding 3.7 million euros, required to self-assess the ITSGF, to pay the IP what they should initially pay for the ITSGF, with the tax revenue ultimately collected by the Community of Madrid.

As for the modifications in the Personal Income Tax (IRPF), approved by Law 13/2023, these include the deflation of the regional tax rate scale to 3.1%, as well as adjustments to the amounts corresponding to personal, family, descendant and ascendant minimums, along with certain regional deductions in the quota, and the income limits applicable to these.

These tax measures will take effect from January 1, 2023, impacting the upcoming accrual periods of the Wealth Tax (IP) and Personal Income Tax (IRPF) until December 31, 2023.



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