Taxes in the Spanish Autonomous Regions

Taxes: Due to low tax rates, Madrid attracts over 70% of all foreign investment in Spain.

There are two basic reasons for attracting so much foreign investment. As mentioned on a previous article, Madrid has one of the lowest office implementation costs in Europe and the best communications and service infrastructure in Spain.

But today, we will write about the second reason as to why Madrid attracts so much foreign investment, bringing companies and professionals, either with their companies or as freelance; the low taxation regime.

Income Tax

In Spain, the collection of Income Tax is partly ceded to each autonomous region. So when you pay income tax you pay part to the government of the autonomous region and part to the government of Spain. Each autonomous region can decide their own income tax rate and it is here where the differences between autonomous regions arise. The difference for an annual income of 45,000 euros could run into hundreds of euros and for high incomes can it could run into thousands of euros.

Inheritance Tax

Madrid is the only autonomous region in Spain which has eliminated this tax.

Capital Gains Tax

Capital gains is a tax which is totally ceded to the autonomous regions in Spain. At 6% of gains, Madrid has the lowest rate by far in Spain. This is especially relevant when selling commercial properties, a market which has seen an increase in investment and occupation levels in recent years. The savings could be substantial depending on the volume of the sale.

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