On the day Kylian Mbappe debuted at Real Madrid, Spanish media mentioned a new tax law applicable to foreign athletes and players. The AS newspaper called it the “Mbappe law.”.

In Spain, personal income tax is paid in two installments. The first installment is for all residents of the land of bulls, and the second installment depends on the taxpayer’s region of residence.

If they earn more than 300,000 euros a year, Spaniards will have to pay a first installment of 24.5%. If they live in Madrid, the second installment will be 20.5%. In total, a person with an income of more than 300,000 euros living in Madrid will have to pay a tax equivalent to 45% of their income.

However, a new law is about to be introduced that will allow high-income earners to significantly reduce their tax payments. Specifically, if certain conditions are met, those earning over 300,000 euros per year in Madrid will be entitled to a second tax reduction of 20.5% of their annual income.

Due to the change that appeared after Real Madrid recruited Kylian Mbappe, the Spanish press called it the “Mbappe tax law.”.

Mbappe has just joined Real Madrid.

To benefit from the “Mbappe tax law,”  high-income earners must live outside Spain for 5 years before moving to Madrid. This is the case for Mbappe. In addition, this person is not allowed to invest in or establish companies based in countries known as “tax havens,” such as Panama, Hong Kong,…

In addition, investing in real estate and investing in companies with 40% of shares under family control also prevents high-income earners from deducting the second tax payment.

Another requirement for the second tax deduction in Madrid is that the investment must be made in the community. According to Marca, the investment must be made in the first year of residency in Madrid or the following year at the latest. In addition, the taxpayer must maintain residency in Madrid for at least six years. Losing residency before that time will certainly result in the loss of the applicable deduction.

This adjustment will help high-income earners, specifically Real Madrid’s stars, significantly reduce the amount of tax they have to pay, thereby helping the Bernabeu team attract more stars in world football.

Mbappe’s income during his 5 years at Real Madrid was 15 million euros per season, with 1.2 million euros in bonuses depending on performance.

In 2005, when David Beckham joined Real, an adjustment was also applied and became known as the “Beckham Law.”. This law allows foreigners settling in Madrid to pay only 24% income tax, regardless of their income.

After Beckham left Real Madrid in 2007, the “Beckham Law” was also abolished in 2010. Since then, foreigners working and settling in Madrid have been subject to a special income tax rate of up to 45%.