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Practical manual for Income Tax 2024. Volume 2. Autonomous community deductions
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For investments from new taxpayers from abroad

Regulations: Art. 17 bis Consolidated Text of the legal provisions of the Community of Madrid regarding taxes ceded by the State, approved by Legislative Decree 1/2010, of October 21

Amount of deduction

20 percent of the acquisition value, including expenses and taxes inherent to said acquisition, excluding interest, of the following assets :

  1. Securities representing the transfer of equity to third parties, whether traded on organized markets or not.

  2. Securities representing equity participation in any type of entity, whether traded on organized markets or not.

Requirements and other conditions for the application of the deduction

  1. Requirements that the taxpayer must meet

    • That it is a natural person not resident in Spain who moves their residence to the Community of Madrid and acquires the status of taxpayer of IRPF as of January 1, 2024, even if the investments that generate the right to apply the deduction have been made during the previous year.

    • To maintain the status of taxpayer of IRPF in the Community of Madrid until the last fiscal year of the investment maintenance period, subject to the following point 2.

    • That has not been a resident in Spain during the five years prior to the change of residence to the territory of the Community of Madrid.

  2. Requirements that the investment must meet

    • It must be carried out in the proper year of acquisition of tax residence in the Community of Madrid , in accordance with the regulations of Personal Income Tax or in the following year .

      It may also be carried out in the year prior to the acquisition of the aforementioned residence in the case of investment in:

      • - Securities representing the transfer to third parties of equity capital issued by Spanish entities .

      • - Securities representing the equity participation of Spanish entities .

    • It must be held by the taxpayer for a period of 6 years , with the onerous transfers of the acquired assets being valid with total reinvestment of the amount obtained in the transfer, within one month from the same, in any of the assets whose acquisition generates the right to apply the deduction.

      When the initial investment was made in the year prior to tax residence , because it was intended for entities of Spanish nationality, the investment made must be maintained until said residence is acquired , being able to reinvest, in the assets and with the requirements indicated in the previous paragraph, from the year in which residence is acquired.

      The obligation to maintain the investment will end, where applicable, on the date of the taxpayer's death.

    • In the case of securities representing the participation in equity of any type of entity , not traded on organized markets, the following conditions must be met to apply the deduction:

      • The entity that is the object of the investment may not be incorporated or domiciled in a tax haven .

      • taxpayer's direct or indirect participation in the same entity, together with that held by his or her spouse or any person related to the taxpayer by blood or affinity, up to and including the degree, may not exceed the entity's share capital or voting rights during any of the calendar years in which the participation is held.

      • The taxpayer cannot perform executive or managerial functions nor maintain an employment relationship with the entity that is the object of the investment.

Temporal scope of application of the deduction

  • The deduction may be applied in the year in which the investment is made and in the five immediate and successive years following in the event of insufficient full tax.

  • In the event that the investment was made in the year prior to the year in which the taxpayer status of Personal Income Tax was acquired in the Community of Madrid , the deduction may be applied in the year in which the aforementioned tax residence is acquired or in the five immediately following and successive years in the event of insufficient full tax.

Order of application of the deduction

If it is combined with other regional deductions, this deduction will be applied after the rest of the deductions to which the taxpayer is entitled.

Loss of the right to deductions made

They will give rise to the loss of the deduction applied:

  • the loss of residence in the Community of Madrid during the period of obligation to maintain the investment or

  • failure to comply with the obligation to maintain the investment made , including the assumption of transfer without total reinvestment .

Incompatibility

This deduction is incompatible , for the same investments , with the application of the regional deductions "For investment in the acquisition of shares and equity interests in new or recently created entities" and "For investments made in entities listed on the alternative stock market".