Discover the tax advantages of Madrid

Madrid’s economy is growing at a frenetic pace, and not just because it is the capital of Spain. Its growth in 2022 is almost double the national average and in the whole of 2021 more than 15,000 companies were set up, a staggering number.

There are many reasons to move a company to the capital, and Madrid’s tax advantages are a major reason.

Today we would like to share with you the main tax advantages of Madrid, advantages that you can enjoy at Ibercenter.

Why is Madrid the best region to set up a company?

Madrid stands out as one of the best regions for setting up a business, and among the factors that stand out are its capital city status, its millions of inhabitants, its high per capita income and its tax advantages.

According to a study carried out before the pandemic by the statistics portal Statista, Madrid was published as one of the top 10 best cities in which to set up a business.

All this means a great deal of business creation within the community, but also a huge investment. If we focus on tax policy, we must consider the lower tax payments and their downward trend, which is an attractive aspect for the creation of companies.

We can find measures with bonuses for the acquisition of industrial land, making the companies have a location and have agile processes so that they have certain means at their disposal.

The region’s potential is increasing because the population has a higher per capita income, making it a very interesting area for the service sector, finance, luxury and real estate.

Tax benefits and advantages of Madrid

It is worth knowing some of the factors that make investing in Spain a good option, and this has a lot to do with the tax benefits that we find:

• Free economy with low tax burden.
• Direct access to large markets and a natural bridge to Latin America.
• Availability of a talented workforce at competitive costs.
• First class infrastructures.
• Technological hub in southern Europe.
• Great entrepreneurial ecosystem.
• Unique quality of life with first class public services.

But in addition to all this, in the Region of Madrid we can find different tax incentives.

• Wealth Tax: In this region there is a 100% tax rebate, but those with assets of more than 2,000,000 euros must comply with the formal duty to file a tax return without income.
• Inheritance and Gift Tax: Only 1% of the inheritance and gift tax is payable on inheritances and gifts between parents and children.
• Particularities with respect to certain donations: A reduction of 100% of the donation received is established, with a maximum of 250,000 euros for donations between relatives belonging to kinship group I, group II and between blood relatives of the second degree.
• Personal Income Tax: The Community of Madrid is the region with the lowest rates in its regional scale.
• Deduction for investment in new or recently created entities: Madrid tax residents can apply a deduction in personal income tax for amounts invested in shares or participations in newly or recently created companies. The deduction percentage is 30% of the investment and the applicable deduction limit is €6,000 per year.
• Deduction for investments in companies listed on the Alternative Stock Market: 20% of the amounts invested.
• Deduction for donations to foundations and sports clubs: This percentage is 15% of the amounts donated.
• Deduction for the promotion of self-employment for those under 35 years of age: For these workers, a deduction of €1,000 can be applied to their Personal Income Tax (IRPF).
• Tax on Onerous Transfers: Madrid has one of the lowest rates for the purchase of real estate with a general rate of 6%.

Settling in Madrid in a business centre.

On many occasions moving or setting up a company in Madrid can require a large investment, but by settling in a business centre in Madrid you can considerably reduce that cost.

At Ibercenter we offer a wide range of services, such as equipped offices, customised offices, meeting rooms, company domiciliation or virtual offices in Madrid, which will allow you to enjoy all the tax advantages of Madrid by having your company domiciled in one of our business centres.