Madrid President Unveils Major Tax Cuts, Defending Fiscal Autonomy
Isabel Díaz Ayuso, the President of the Community of Madrid, has announced a major tax cut affecting the Inheritance and Donations tax, which is expected to benefit approximately 14,000 residents of the region. During a conference organized by the Forbes House Club, Ayuso detailed the new policy that will see discounts for transactions between siblings and between aunts/uncles and nephews/nieces by blood relation increase from 25% to 50%.
This increase makes Madrid a trailblazer in Spain, being the first region to implement such a measure in both classifications of the tax at this familial degree. Ayuso defended this policy as part of her government’s ongoing campaign against what she described as an unfair and outdated tax system, noting that many European Union countries have already abolished similar taxes.
"I ask for respect for our fiscal autonomy and for the decision of the people of Madrid, who have chosen this path through the ballot box. Our tax policy makes us attractive and competitive, and it does not come at the expense of the rest of Spain but rather the opposite," Ayuso asserted.
In anticipation of potential criticism regarding this new tax cut, Ayuso emphasized that this is not an instance of tax dumping. She argued that the Community of Madrid is exercising its autonomy as outlined in the Spanish Constitution, allowing it to devise its own tax policies with a view toward making the region more economically competitive. She contrasted this approach with other parts of Spain where high unemployment, particularly among self-employed workers and young individuals, has become a pressing issue.
The newly announced tax reduction is one of nine tax cuts that will take effect this year in the Community of Madrid. Notably, it will introduce a 100% discount on gifts between individuals under €1,000, thereby eliminating the need for self-assessment for amounts below that threshold. Additionally, the requirement for a public document for the registering of existing donations of up to €10,000 has been abolished, facilitating a more straightforward process.
For instance, in a hypothetical scenario, if two siblings inherit a home worth €200,000 and savings of €100,000 from a deceased sibling without direct descendants, they each stand to save over €15,600 on their taxes under the new policy—an increase of nearly €7,850 each.
Similarly, four nephews or nieces inheriting from their uncles under the same conditions will now see savings exceeding €7,200 each—a notable increase of around €3,620 each.
This announcement marks the second tax reduction in Inheritance and Donations during Ayuso’s administration, following a cut approved in 2022 that raised discounts from 15% to 25% between siblings and from 10% to 25% for aunts/uncles and nephews/nieces. Once fully in effect, these new measures are anticipated to save Madrilenians an additional €188 million annually.
For decades, the Community of Madrid has been focused on tax reduction as a central tenet of its economic policy, accumulating 31 tax cuts under Ayuso's leadership. This has included a 0.5 point reduction across all segments of the autonomous income tax scale, alongside other deductions.
Critics, including the government of Pedro Sánchez and leaders from various autonomous communities, have accused Ayuso of engaging in tax dumping—offering extensive fiscal benefits to lure taxpayers from other regions. In response, Ayuso and her administration have proudly announced that they have saved Madrilenians €263 billion in taxes over the past five years.
The continued focus on reducing taxes stands as a significant pillar of the PP government’s strategy over the last two decades, emphatically establishing Madrid as a competitive economic hub in Spain.
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