Earlier this year, it was widely reported that Real Madrid CF plan to sign French star Kylian Mbappé upon the expiry of his contract with Paris Saint-Germain F.C. this summer.
Now, El Nacional are reporting that Isabel Díaz Ayuso, the President of the Community of Madrid, is proposing to introduce a new beneficial tax regime for foreign individuals living in Madrid, in what has already been colloquially coined as 'Ley Mbappé' – or Mbappé's Law. The new law would reportedly apply to foreigners taking up residence in Madrid and investing in private companies and other financial assets. Amongst other benefits, it would operate to effectively reduce the individual's personal income tax rate to 24.5%.
The law will no doubt remind those familiar with Spanish taxation of the 'Beckham Rule' – introduced by the Spanish government following Real Madrid's signing of David Beckham in 2003 and still a popular option to this day. Broadly speaking, the 'Beckham Rule' allows for foreigners relocating to Spain to be subject to Spanish tax only on Spanish-source income (and not their non-Spanish income) for up to 6 years.
Whilst Mbappé's Law, like the Beckham Rule, may carry the name of a famous footballer, it is intended to be available to a wider range of high net worth individuals and forms part of Ayuso's attempts to incentivise foreign investment in her Community of Madrid, in priority to other Communities around Spain. The Beckham Rule continues to attract foreigners to Spain – but Mbappé's Law may now make Madrid the destination of choice for those individuals.
It also comes at a particularly interesting time, so soon after the Spanish President, Pedro Sanchez, announced that Spain would abolish the so-called 'Golden Visa'.
Taylor Wessing are market leading specialists in advising internationally mobile high net worth individuals and work closely with our partner firm ECIJA when advising on matters concerning Spanish taxation. If you have any queries, please do not hesitate to get in touch.
