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Madrid is the Autonomous Community with the lowest tax burden of all Spanish regions. All taxes that are the responsibility of the Autonomous Communities, such as the wealth tax, are fully subsidized. Others are partially subsidized.
There is a series of state taxes that must be complied with by both individuals and legal entities residing in Spain.
It applies to legal entities residing in Spain, understood as companies incorporated under Spanish law or having their registered office and headquarters in Spanish territory.
The general tax rate is 25%, although there are various tax incentives, including those related to R&D and technological innovation.
In addition, there are certain tax benefits of this tax that make investment in our country very attractive:
This applies to all individuals residing in Spain, i.e., all those who spend 183 days or more in the country.
This tax is levied on income from work, real estate capital or other economic activities, as well as income derived from savings.
In Madrid, the maximum personal income tax rate is 45%, unlike other Autonomous Communities such as Catalonia, Valencia or the Basque Country, where it is around, and even exceeds, 50%.
IRPF 2022 | ||
Autonomous Community | Minimum amount | Maximum amount |
Madrid | 18% | 45% |
Cataluña | 20% | 50% |
Valencia | 19,50% | 54% |
País Vasco | 23% | 49% |
This tax is levied on individuals and entities not residing in Spanish territory on income earned in Spain. It progressively taxes the income obtained from economic activities, whether there is a permanent establishment or not.
At the same time, any individual who begins to reside in Spain for work purposes may opt to be taxed at a fixed tax rate of 24% for the first 600,000 euros received during the tax period in which the change of residence takes place and during the following five tax periods. This is known as the Beckham Law.
It has a tax rate of 1%, and comprises three different taxes:
Tax exemption
There are several direct taxes on which Madrid applies an almost total rebate:
Companies based in Spain, both domestic and foreign, are eligible for a wide range of incentives and financial aid aimed at promoting investment, competitiveness and economic growth. These incentives are mainly aimed at productive investments, research, development and innovation (R+D+i).
In addition, companies can access different aid programs within the European Union.
There are many types of aid depending on the objective and type of aid, the economic sector targeted, the type of beneficiary company, the amount of aid or the official body that grants it.
Broadly speaking, four types of aid can be distinguished:
Most of the aid that can be obtained from the different agencies depends to a large extent on the specific characteristics of each investment project.
On its website, Invest In Spain provides an aid search engine so that companies can find out what type of incentives they are eligible for according to their specific characteristics
In addition, the General Directorate of Industry and Small and Medium-Sized Enterprises periodically publishes the “Dynamic Guides to Grants and Incentives”, which include all the grants and incentives awarded and announced by the public administrations in Spain. The guides are permanently updated and contain information only on the grants and incentives for which the application period is open.
We help you to take all the necessary steps to create your company
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