The Community of Madrid has approved Law 2/2025, introducing new measures aimed at reducing the tax burden associated with Inheritance and Gift Tax and simplifying certain administrative requirements for transactions between family members.

One of the main changes is the increase in the tax rebate from 25% to 50% for donations between siblings, uncles/aunts, and nephews/nieces (second- and third-degree collateral relatives), representing a significant reduction in taxation for these types of asset transfers.

In addition, the regulation introduces a new framework for so-called “occasional donations,” establishing a 100% tax rebate — meaning a full tax exemption — for amounts of up to EUR 1,000, with the aim of facilitating small financial transfers within families.

From an administrative standpoint, the law also promotes bureaucratic simplification by eliminating the requirement to formalize donations through a public deed before a notary when the amount does not exceed EUR 10,000. For higher amounts, the usual requirements remain in place, including the filing of the corresponding self-assessment form (Form 651).

This reform further strengthens Madrid’s position as a fiscally competitive jurisdiction, particularly attractive for families with complex asset structures and estate planning needs at both the national and international levels.

Source: La Comunidad de Madrid facilita las donaciones entre hermanos y tíos y elimina el impuesto para importes de hasta 1.000 euros.

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