B Law & Tax
05 April 2024

The Community of Madrid Initiates the process for processing deduction in Personal Income Tax to attract foreign investment

The Community of Madrid, within the framework of its legislative prerogative, has initiated the processing of the new deduction contemplated in the Personal Income Tax (IRPF), with the purpose of promoting and attracting foreign investments.

This process is based on the aim of fostering international investment in the Madrid region, and aligns with the regulatory initiative represented by the regional draft law aimed at attracting foreign investors. It is worth noting that once this draft law is approved, it will have effects for all fiscal periods from January 1 st , 2024.

According to the provisions of the draft law, non-resident individuals in Spain who become taxpayers of the IRPF in the Community of Madrid will have the ability to apply a 20 percent deduction in the autonomous quota of the IRPF for investments made in financial assets within a maximum period of six years.

Requirements and period of application for the 20% deduction of the autonomous IRPF quota.

It is important to highlight that, according to the requirements established in the draft law, the application of this deduction is conditioned upon meeting certain criteria, such as the non-residence of the taxpayer in Spain during the five years prior to transferring their tax residence to the Community of Madrid.

Additionally, specific conditions are set for the application of the deduction, such as the prohibition that the entity in which the investment is made is constituted or domiciled in a tax haven, as well as the limitation of the taxpayer’s participation in the receiving entity of the investment, among other aspects.

The deduction can be applied in the fiscal year in which the investment is made and in the immediate and subsequent five fiscal years in case of insufficient full quota, provided that the conditions established in the draft law are met.

In summary, the Community of Madrid, through the initiation of this processing procedure, seeks to enhance the attraction of international investments, thereby contributing to the economic and social development of the region, in line with the objectives outlined in its regulatory and strategic framework.

B Law & Tax International Tax & Legal Advisors.


“En B LAW&TAX somos especialistas en asesoramiento fiscal internacional tanto a empresas como para particulares. Si desea ampliar la presente información, estaremos encantados de poder atenderle en el 917817194 o en [email protected]