Extra tax on the rich reaches appeal court

The Constitutional Court (TC) will see this Tuesday the appeal presented by the Community of Madrid against the tax on large fortunes, which the regional government presented in February of this year considering it “an attack” against the Community from Madrid.

The temporary solidarity tax on large fortunes, approved for the years 2023 and 2024, affects net assets exceeding 3 million euro, accrues on December 31 of each year and the presentation of the declaration occurs between 1 and on July 31.

In addition to Madrid, three other autonomous communities -Andalusia, Galicia and Murcia-, all of them governed by the PP, have appealed the rate; Likewise, in March the Madrid Assembly presented its own appeal to the TC, in compliance with the mandate of the plenary session of the regional Chamber, which approved this initiative at the proposal of the PP and with the support of Vox.

Last September, the National Court ruled out provisionally suspending the tax, as intended by the Madrid Association of Family Businesses (AMEF), understanding that this would mean the suspension of a law, something that is outside its powers.

The temporary solidarity tax on large fortunes has raised 623 million euro in 2023, affecting 12,010 large estates – just 0.1% of all taxpayers – who have paid an average fee of 52,000 euro, according to data from the Ministry of the Treasury.

In order to avoid double taxation, taxpayers of the tax on large fortunes only pay taxes on the part that has not been taxed by their autonomous community in the wealth tax, hence the collection comes mainly from the communities that benefit totally or partially said tax.

As detailed by the Treasury, the total collection from the tax on large fortunes and the wealth tax amounts to more than 1,8 billion euro this year, a figure in line with the Government’s forecasts.

Of the 12,010 filers, the majority correspond to large assets from Madrid (10,302 taxpayers), who have contributed 555 million euro; In second place is Andalusia, with 865 taxpayers who have paid 29.7 million, and in third place, Galicia, with 91 taxpayers who have paid 9.8 million.

The government of Madrid, chaired by Isabel Díaz Ayuso, for its part, maintains that this temporary solidarity tax on large fortunes of more than three million euro will cause losses to the public coffers of the region of between 1,2 and 1,6 billion per year, since that will stop foreign investments in the region.

Likewise, she argues that the Government imposes a national quota for all the autonomous communities, which have powers in fiscal policy, according to article 156 of the Constitution.

Another aspect that the Madrid Executive denounces is “the legal uncertainty” of the new tax, due to its retroactive effects for all of 2022 despite its entry into force at the end of December, which entails “a tax burden” for the wealthiest of taxpayers who were not expecting it.

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