The Community of Madrid will temporarily take on the responsibility of collecting the Temporary Solidarity Tax on High Fortunes, approved by the central government, with the purpose of using the funds to further reduce the tax burden in the region. To achieve this, it will adjust the rebate on the Wealth Tax for those already affected by the national measure.
This legal modification aims to prevent the central government from directly collecting and distributing funds that, mostly (90%), come from taxpayers in the region, according to data from the Ministry of Finance. Following the Constitutional Court’s decision on the appeal filed by the Community of Madrid and other autonomous communities, arguing that the Solidarity Tax undermines their fiscal autonomy and double-taxes the same taxable base, the regional government will consider new reductions to return the collected funds to the citizens of Madrid.
According to a report from the Department of Economy, Finance, and Employment presented in the Government Council, the modification in the Wealth Tax regulations will be implemented through a Proposed Law to the Madrid Assembly. The proposal will change the rebate on the Wealth Tax so that those who must pay the national Solidarity Tax do so through the autonomous management tax, applying to declarants with assets starting from 3 million euros.
They will remain exempt from the Wealth Tax, with a 100% rebate. This measure is expected to take effect in 2023. The modification of the rebate, along with the new rate, will affect 10,302 declarants, with an estimated annual collection of 555 million euros. This exemption will continue as long as the Solidarity Tax is in effect, initially temporary for 2023 and 2024. It is worth noting that the Community of Madrid has maintained the rebate on the Wealth Tax for the last 15 years, considering it an unfair and ineffective fiscal measure, and Spain is the only country in the OECD that retains it.
B Law & Tax International Tax & Legal Advisors.
“In B LAW&TAX we specialize in international tax advisory services for both companies and individuals. If you would like to obtain further information, we would be delighted to assist you at 917817194 or at [email protected]”