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The "Mbappé Law" and its tax benefits in Madrid

The Publicado: 13-06-2024

What is the Mbappé Law? 

The Mbappé Law is a legislative proposal in the Community of Madrid that seeks to attract foreign investors and professionals of high economic value through tax benefits. Although it is known as the "Mbappé Law" after French football player Kylian Mbappé, its official name will be different, as it has not yet been approved nor entered into force. The main objective is to encourage foreign investment and generate a positive economic impact. This law contemplates tax reductions in the autonomous region`s Personal Income Tax (IRPF) for new residents who invest in the region, by up to 20%. 

What are the tax differences between the Beckham Law and the Mbappé Law? 

The "Beckham Law" focused on allowing foreigners to be taxed as non-residents for a certain period of time, with tax benefits specifically for higher incomes, while the "Mbappé Law" seeks to introduce a special deduction for foreigners or returnees moving to Madrid, which could mainly benefit large fortunes and has raised concerns about tax competition between autonomous communities. At Gentile Law, we have successfully guided our clients through the various matters that Beckham Law concerns.

Why "Mbappé Law" and which sections are affected? 

The "Mbappé Law" in the Community of Madrid will affect the regional bracket of the Personal Income Tax (IRPF) for those beneficiaries with income over €300.000 per year. These beneficiaries will be able to enjoy a deduction of 20% in the autonomous section of the IRPF, which means that they will go from paying 45% of their income in taxes to paying only 24,5%. 

This measure seeks to attract football players and other high-net-worth professional athletes to teams in Madrid, such as Real Madrid or Atletico Madrid, instead of cities such as Barcelona, where the IRPF bracket remains at 50% of profits. 

For professional football players in this bracket, the tax savings will be significant. For example, they would go from paying 18 million euros to paying only 9.8 million euros. 

Who will be able to benefit from this law? 

The following individuals will be able to benefit from the new Mbappé Law: 

  • Those who have not resided in Spain during the last five years before establishing residence in Madrid;
  • Those who invest in financial entities or assets for a minimum of 6 years, as long as they do not go to tax havens; and
  • Those who invest in family businesses with a maximum limit of 40% of the capital stock

What steps must be taken to benefit from the law? 

These are the steps to follow to benefit from the Mbappé Law:

  • Locate habitual residence in Madrid; 
  • Make investments in accordance with the established requirements; and
  • Register the investments properly in the tax return in order to apply the corresponding deduction.

Do you need specialized tax advice? 

If your preference is to have all the information and means to act as soon as this new law comes into force, do not hesitate to contact our tax experts. 


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