New deduction for investments for non-residents who become IRPF taxpayers in the Autonomous Community of Madrid.

The deduction will amount to 20% of the acquisition value of certain assets and will require maintaining the investment and residence for several years. Law 4/2024, of November 20, was published to establish a deduction for investments by new taxpayers from abroad in the field of IRPF.

Who can benefit from the deduction?

Individuals who are not resident in Spain who become IRPF taxpayers in the Community of Madrid (from January 1, 2024), who have not been residents in Spain during the five years prior to changing residence to said community, may benefit from the deduction.

How much will the deduction be?

The deduction will amount to 20% of the acquisition value (including expenses and taxes inherent to the acquisition, excluding interest) of (i) securities representing the transfer to third parties of own capital, traded or not, on organized markets; and (ii) securities representing participation in the equity of any type of entity, traded or not, on organized markets.

Requirements to be met

(1) In the case of investment in securities representing participation in the equity of entities. It cannot exceed 40% of the capital or its voting rights. In addition, the taxpayer may not carry out executive or management functions or maintain an employment relationship in the entity.

(2) The investment must be made in the year of acquisition of tax residence in the Community of Madrid or in the following year. If the investment is made in securities issued by or representing Spanish entities, it may also be made in the year prior to the acquisition of said residence.

(3) The investment must be maintained for six years. In the event that the initial investment was made in the year prior to the acquisition of tax residency, it must be maintained until the acquisition of residency, with the reinvestment being valid from the year of acquisition of residency.

When can the deduction be applied?

The deduction may be applied in the year in which the investment is made and in the following five years in the event of insufficient total quota; although if the investment was made in the year prior to the acquisition of the status of taxpayer, it may be applied in the year in which residency is acquired or in the following five years.

Resident status in the Community of Madrid must be maintained until the last year of the period of maintenance of the investment. The loss of residency in that period or failure to comply with the obligation to maintain the investment will result in the loss of the applied deduction.

The deduction is incompatible, for the same investments, with the deductions for investment in shares and interests of new or recently created entities and for investments in listed entities already regulated previously in the norm (articles 15 and 17).

This article is only informative, do not hesitate to call us if you have any specific questions about the deductions.

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