The corresponding bill provides for an increase in the tax reduction from 25% to 50% for transactions between siblings and between uncles or aunts and their blood-related nieces and nephews. Furthermore, it foresees sporadic gifts between individuals of less than EUR 1,000 to be completely exempt, i.e. there would be no obligation to submit a self-assessment for gifts below this amount. For gifts of up to EUR 10,000 the requirement of formalizing such gifts in a public deed before a notary would also no longer apply.
According to estimates, the measure will generate tax savings of EUR 140 million per year for the citizens of the Autonomous Region of Madrid. The new tax cut is the last in a series of 32 tax reduction measures approved under the governance of Díaz Ayuso since 2019. They contribute to Madrid remaining the autonomous region with the lowest taxes in Spain.
The bill containing the reduction was drawn up by the Madrid Ministry of Finance, Economy and Employment and will now be submitted to the regional parliament for approval in a single reading. The measure is expected to come into force in the coming months.
Although the Autonomous Community of Madrid is the only region in Spain that does not levy its own (additional) regional taxes, it has been considered the top tax region in Spain according to the Tax Competitiveness Index (Índice Autonómico de Competitividad Fiscal) since 2020. This index compares the tax structures of Spain’s autonomous regions and is prepared by independent experts from the liberal foundation Fundación para el Avance de la Libertad and the US American Tax Foundation. In addition, Madrid’s economic policy marked by tax cuts has actually increased public revenues, which grew by EUR 897 million in 2022 in the regional share of the income tax to a total of EUR 13.4 billion. This corresponds to an increase of 7.2%.
This measure contrasts with the tax model of the Spanish central government, which has implemented almost 100 tax increases since 2018.