The president of the Community of Madrid, Isabel Díaz Ayuso, has announced this Thursday that anyone who has not lived in Spain in the last five years and wants to invest in the region will be able to deduct 20% of the total amount invested, distributing it among their declarations income tax for the next six years.
That bet, launched during a speech at the 13th edition of
Spain Investors Day
, which brings together listed Spanish companies and international investors for two days, has three advantages for the interests of the conservative leader.
First, she allows him to confront the central government, which has promoted a tax on large fortunes.
Second, it increases the attractiveness for foreign heritage of Madrid, which already attracts more than 70% of foreign investment in Spain.
And third, just before the May 28 elections, it revitalizes the PP's policy of tax cuts, which has meant that successive Madrid regional governments have given up more than 60 billion euros in revenue since 1995.
"I announce that we are going to approve a tax incentive for new investors in the Community of Madrid that we intend to act as a counterweight to Pedro Sánchez's wealth tax," the regional president said this Thursday about a measure that must first be approved by her Government , and then by the Assembly, so it is difficult to calculate when it will enter into force, since in between there are elections in May.
“With this new deduction, whoever comes to live in Madrid, and invests their assets, whether in a home, in a company, in financial products, in whatever, will obtain a reduction in their regional section of the corresponding income 20% of said investment”, he continued.
"We only put two conditions," he stressed.
And he has listed: “The first, that comes from outside Spain, specifically we establish a limit of at least five years living abroad to be able to enjoy this deduction.
And the second, that he invest his assets, in what he wants, and as much as he wants, but that generates wealth and prosperity for all ”.
Thus, for example, a Spaniard residing abroad for five years who returns to Spain and buys a house for 300,000 euros, will save 60,000 euros in taxes.
If you invest 12,000 euros in shares or funds, your profit would be 2,400 euros.
Or if a large foreign estate undertakes the adventure of becoming a shareholder in a Madrid company, for example, with one million euros, they will save 200,000 euros on their tax bill, which they can distribute over six years.
The regional government calculates that for every 1,000 million investment obtained in this way, revenue would increase by 125, 886 would be added to the regional GDP and 13,000 jobs would be created.
There is nothing random in the decision.
Only one day after the Community announced for the umpteenth time that it will appeal the state tax to large fortunes before the Constitutional Court, the presentation of the new reduction is dressed as a "counterweight" against the Sánchez measure.
With the polls already on the horizon, Ayuso plans to deepen his freedom speech, transferred to all fields: tax, health, education, social services... In parallel, he will highlight that Madrid is the economic locomotive of Spain .
And to reinforce that image, he will use measures like the one announced this Thursday.
Six tax breaks
Thus, the Government of Ayuso has approved six tax reductions since the May 2021 elections that will mean that the regional public coffers stop entering more than 700 million euros each year for these concepts.
Everything is entrusted to the Laffer curve, theorized on a napkin and a thousand times denied by multiple academics: it is assumed that less taxes, more collection, because citizens have more money to spend.
The consequences of validating the theory are not neutral: the success depends on whether there is money to finance public services.
Ayuso's main tax reform came in 2021: a reduction of half a point in all the regional sections of the IRPF, valued at 330 million and which especially favors high incomes, as occurs in all progressive taxes.
That same year came a gesture of ideological, propagandistic and political value, although not economic: suppressing all own taxes (3.4 million euros, which barely represented 0.02% of the collection).
These two decisions have been joined in 2022 deductions to promote the birth rate (34.7 million);
the extension to 25% of the Inheritance and Gift Tax rebate for brothers and uncles and nephews (48.3 million euros);
the deflation of personal income tax (almost 200 million, which once again concentrates the benefit on the highest incomes);
But the fiscal acceleration of the Ayuso Government does not stop.
The first month of 2023 has not yet passed, and there is already a new tax reduction: anyone who has not lived in Spain in the last five years and wants to invest in the region will be able to deduct 20% of the total amount invested by distributing it among their income tax returns for the next six years.
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