If you live in the Community of Madrid you will enjoy the following tax benefits

Madrid was the first Community to approve a reduction in personal income tax that benefits the lowest incomes.  

Since 2018,  the rate applicable to the first tranche of the regional scale (payable bases up to 12,450 euros), has been  9 percent  (compared to 9.5 percent established in the State scale).

In 2022,  a new reduction of 0.5 percentage points came into force in all sections of the regional scale. 

With this reform, the minimum rate is set at 8.5 percent for payable bases up to 12,450 euros. 

In the second tranche, up to 17,707.20 euros, the rate stands at 10.70 percent (compared to 12 percent set by the State). 

The reduction benefits all taxpayers who earn income from work, but mainly the lowest income,  since almost half of Madrid tax relief service have earned income of less than 17,707.20 euros and  almost a third of the total are less than 12,450 euros .

Since January 1, 2010,  Madrid taxpayers with three or more children or descendants  have been able to apply a minimum per descendant  10 percent higher  than that established in state regulations.

In addition,  since January 1, 2015 , its amount is  increased by all amounts as a minimum for descendants  and the maximum possible increase is maintained in the case of third or subsequent descendants.

Thus, for the third descendant, an amount of  4,400 euros can be applied  (compared to the 4,000 euros contemplated in state regulations), which rises to  4,950 euros  in the case of the fourth and successive descendants (compared to 4,500 state euros ).

Finally, in line with the deflation of the rate, the minimums due to personal and family circumstances are also updated at 4.1 percent. 

If you live in the Community of Madrid, you can apply a  deduction in personal income tax for the amounts invested  in shares or participations in new or recently created companies .

With effect on your 2018 tax return, important new features are introduced:

The deduction percentage is broadened in general, from 20 to 30 percent of the investment , as well as the applicable deduction limit , which goes from 4,000 to 6,000 euros per year.

In addition, in the case of investment in labor companies (limited or anonymous) or cooperatives, as well as in entities created or participated in by universities or research centers, the deduction percentage rises to 50 percent of the investment and the limit of deduction increases up to 12,000 euros per year .

Likewise, the previous requirement that the investor contribute their business or professional knowledge suitable for the development of the company in which they invest is deleted.

The bonus of 95 percent of the Onerous Patrimonial Transfers and Documented Legal Acts quota applicable for the acquisition of real estate and for notarial documents that formalize the acquisition, grouping, division and segregation of properties, the declaration of work is extended during 2019 new and the horizontal division, relating to properties linked to the development of industrial activities located in municipalities of the Corredor del Henares, Metropolitan South and Southeast of the Community of Madrid.

If you live in the Community of Madrid, you do not pay Wealth Tax because there is a discount of 100% of the quota . 

Only those who have assets greater than 2,000,000 euros must comply with the formal duty of submitting their tax return but without income. 

In the Community of Madrid, both parents and children , as well as spouses and common-law partners only pay 1% of the amount corresponding to the Tax levied on inheritances and donations.

In addition, from October 28, 2022, the  brothers, uncles and nephews of the deceased or donor may apply a 25% bonus on the tax rate.

Previously, the inheritances and donations acquired by the brothers  were subsidized by 15%  of the tax quota and  10%  for  uncles and nephews.

As of January 1, 2019 , a 100 percent bonus is established in the Property Transfer Tax for the acquisition of movable property and livestock whose real value is less than 500 euros.

The bonus will not be applied in the case of  goods made with precious metals or vehicles that must be registered in public registries of those contemplated in the General Vehicle Regulations.

Nor is it applicable to acquisitions made by businessmen to affect their activity.