10.12.23. For investments from new taxpayers from abroad

Amount

Non-resident individuals in Spain who become personal income tax payers in the Community of Madrid may apply a deduction of of the acquisition value, including expenses and taxes inherent to the acquisition, excluding interest, which would have been paid by the purchaser, of the following assets:

Securities representing the transfer of equity capital to third parties, whether traded or not, on organized markets.
Securities representing equity participation in any type of entity, whether traded or not, on organized markets.

Requirements and conditions

The deduction may be applied by individuals who become personal income tax payers in the Community of Madrid as of January 1, 2024, even if the investments were made during the previous year, provided that they materialize at the values indicated in point 2.
The investment must be made in the same year in which tax residency is acquired in the Community of Madrid, in accordance with personal income tax regulations, or in the following year.

However, the investment may also be made in the year prior to acquiring residency in the case of investments in securities representing the transfer to third parties of equity capital issued by Spanish entities and securities representing participation in the equity of Spanish entities.
The taxpayer must maintain the acquired investment for a period of six years. Transfers of acquired assets are valid for consideration, with the full amount obtained from the transfer being reinvested within one month of the transfer in any of the aforementioned assets.

When the initial investment was made in the fiscal year prior to the acquisition of tax residency, the investment must be maintained until such residency is acquired. The investment may be reinvested in the assets and subject to the specified requirements, starting from the fiscal year in which residency is acquired.
In the case of investment in securities representing participation in the equity of any type of entity, not traded on organized markets, the entity:
- It may not be incorporated or domiciled in a tax haven
- The direct or indirect participation of the taxpayer, together with that held in the same entity by his/her spouse or any person related to the taxpayer by kinship, in a direct or collateral line, by consanguinity or affinity, up to the second degree included, cannot be, during any day of the calendar years in which the participation is maintained, greater than 40% of the share capital of the entity or its voting rights,
- The taxpayer may under no circumstances perform executive or management functions or maintain an employment relationship with the entity that is the object of the investment.
The taxpayer cannot have been a resident in Spain for the five years prior to changing residence to the Community of Madrid.
The taxpayer must remain a resident of the Community of Madrid until the final fiscal year of the investment maintenance period.

Loss of residence in the Community of Madrid during the investment maintenance obligation period or failure to comply with the obligation to maintain the investment made, including the case of transfer without full reinvestment, will result in the loss of the applied deduction.
In the event of insufficient full tax, the deduction may be applied in the fiscal year in which the investment is made and in the five immediately following and successive fiscal years.

If other regional deductions are applicable, this deduction will be applied after any other deductions to which the taxpayer is entitled.

If the investment was made in the year prior to acquiring personal income tax status in the Community of Madrid, the deduction may be applied, in the event of insufficient full tax, in the year in which the aforementioned tax residence is acquired or in the five immediately following and successive years.

Incompatibility

This deduction is incompatible, for the same investments, with the 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."

Completion

It will record the acquisition value of the assets that correspond to the holder of the declaration.