The Regional Government of Madrid (CAM) approves a Tax Rebate in Madrid last December 5th. The Plenary of the Regional Assembly approved the Law of Fiscal Measures of the Community for 2019. It contemplates a package of tax reductions in the IRPF that will be applied retroactively already for this declaration 2018. As well as another series of measures that will come into effect from next year. Measures that will affect Inheritance and Gift Tax, Wealth Tax and Transfer Tax and Documented Legal Acts.
Tax Rebate in Madrid. Measures
Next we detail you this new Tax Rebate in Madrid:
Inheritance and Gift Tax
- Bonuses between brothers, uncles and nephews. As we know, the Tax is deducted 99% in successions and donations between spouses, as well as between parents and children. According to the approved Law, a 10% bonus will be applied in the operations carried out between uncles and nephews, and in the case of operations between siblings, the bonus will be 15%.
- Exemption in donations. A minimum exempt of €250,000 is created for donations made between parents and children, spouses and siblings and which are intended for the acquisition of a habitual residence, the start-up of a professional business or economic activity.
Personal Income Tax (IRPF)
- Lower tax rate. The minimum marginal income tax rate paid by Madrid taxpayers will be reduced by half a point. At 9%, which, adding the state rate of 9.50%, means a total marginal rate of 18.50% for incomes of up to €12,450 per year. This measure places Madrid as the Autonomous Community with the lowest IRPF tax rate in the country.
- Deduction for school fees. A deduction of 15% is created for school expenses borne by descendants between 0 and 3 years old, with a limit of €1,000 per year. This deduction will be compatible with the receipt of the nursery cheque.
- New Deduction per caregiver for children under 3 years of age. A new deduction is created linked to the hiring of a carer for descendants under the age of three, reaching 20% of the cost of the carer’s Social Security contribution with a maximum of 400 euros per family per year, the figure rises to 500 euros in the case of large families. This deduction will be compatible with school fees.
- Deduction for foster care for over 65s or people with disabilities. The deduction is extended from €900 to €1,500.
- It improves the Deduction for entrepreneurship. The deduction for the acquisition of shares and participations in new entities is improved up to €12,000. And 50% of contributions to the capital of cooperatives and worker-owned companies are subsidised up to €12,000.
- Deduction for donations. A deduction of 15% is promoted for donations to foundations. Extending it to donations to elementary and basic sports clubs.
ITP and AJD Bonus
- Purchase and sale of houses. In order to favour the purchase and sale of houses, the Law contemplates new bonuses in ITP and ADJ. In both Onerous Asset Transfers and Documented Legal Acts, a 10% bonus is established for the acquisition of a habitual residence with a value of less than €250,000. For large families, a bonus of 95% is established for the purchase of their habitual residence.
- Rentals of housing. Taxation of housing rents on annual incomes not exceeding €15,000 has been eliminated in Onerous Patrimonial Transmissions. A bonus of 100% of the quota is established.
For more information about this Tax Rebate in Madrid or any other more specific measure, please do not hesitate to contact us.
Arrabe Integra
Tax Consulting Dept.
