‘The Mbappe law’ – How Madrid government will help Real Madrid to sign Kylian Mbappe with new tax law

Real Madrid look poised to sign Kylian Mbappe on a free from Paris Saint-Germain this summer, and while the French forward could no doubt earn more elsewhere, there is little doubt that he will become the highest paid player in Real Madrid history. Equally, he is set for a handy tax ruling to go through just before he signs.

Acccording to Relevo, a new tax law set to come into place in the region of Madrid, which is already known as the ‘Mbappe law’. This would be the second piece of tax legislation to be known after a Real Madrid player, following ‘the Beckham law’, which also saw foreign nationals pay less tax.

The resulting law, proposed by the Partido Popular last year, and to be put up for vote this year again, will see foreign nationals who invest pay up to 20% less tax on their earnings in the region of Madrid. Equivalent to the amount of 20% of their investments, were Mbappe to earn €20m per year at Real Madrid, and he invested €20m, he could receive 20% of that back in tax breaks,  equating to €4m.

As a high earner, Mbappe would be taxed close to half of his wages were he not to invest, but with that 20% discount, would be paying just 24.5% – the same amount as a worker earning just €24k per year. For context, the average salary is just over €31k per annum in the city of Madrid.

It could be a significant pay bump for Mbappe if he is to take advantage of the prospective law, and it is predicted he could be one of 30,000 people who would move their tax domicile to the city as a result, presumably mostly high earners.

Of course the people pushing through the legislation, Partido Popular Mayor of Madrid Jose Luis Martinez-Almeida and President of the Community of Madrid Isabel Diaz Ayuso, are well known to Real Madrid President Florentino Perez. The trio shared a table with Tom Brady on Monday night at the Laureus Awards, and both were spotted in the director’s box with Perez during Real Madrid’s clash with Manchester City.

It is not the first time that the close relations between the leading politicians in Madrid and Perez has been pointed out. Despite allegedly violating environmental regulations and planning permission, the city council of Madrid is pushing ahead with a parking project next to the Santiago Bernabeu, which will be built with public money, and leased to the company Real Madrid Estadio to manage. The CEO of that company is Jose Angel Sanchez, General Manager at Real Madrid, and Real Madrid Estadio are projected to make a profit of €500m over the 40-year lease.

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