The ‘Mbappé Law’ is a new tax incentive introduced by Madrid to attract foreign investors and talent to live in the region.
The Community of Madrid published the new Law 4/2024 in its Official Gazette on 28 November 2024. The key aim is to attract wealthy individuals, families and sports stars to Madrid from abroad by offering a significant deduction for personal income tax on certain assets.
Law 4/2024 is more familiarly known as the “Mbappé Law” after French football star Kylian Mbappé, whose high-profile signing by Real Madrid coincided with the law’s approval. This echoes Spain’s ‘Beckham Law’, which dates back to David Beckham’s contract with the club 20 years ago and is still used today.
How the Mbappé Law works
With effect from 1 January 2024, new residents in Spain who establish tax residence in Madrid can benefit from a deduction equal to 20% of their investments in the regional tax bracket of the personal income tax. Since income tax rates in Spain are comprised of both regional and state rates, this new deduction can only apply to the regional Madrid half.
This tax deduction applies to securities representing the transfer of capital (such as bonds, fixed interest, etc.) or equity participation.
If you meet the conditions and eligibility criteria, the deduction can be applied in the fiscal year when the investment is made. For example, if you earn €10 million per year and decide to invest €2 million in local companies, 20% of your investment would be exempt from Madrid’s regional taxes. This would be a tax saving of €400,000. Depending on how much is invested, the regional tax bracket will be reduced accordingly. If the taxpayer’s tax liability is insufficient to absorb the full deduction, the unused amount can be carried forward and applied over the next five years.
In addition to investors, the Mbappé Law could also benefit athletes who establish tax residence in Madrid after relocating.
Conditions and eligibility
The assets do not need to be in Madrid but do need to meet conditions to qualify. For example, they cannot be real estate assets or located in a tax haven, and you cannot hold more than 40% of the shares or equity.
You must also meet certain conditions to be eligible for this tax regime, such as not being a tax resident of Spain for the previous five years. You also need to live in Madrid and maintain the investments for six years.
Note that this new benefit is not compatible with the Beckham law; it is not possible to opt for both regimes at the same time.
Wider implications and national context
The Mbappé Law has only been adopted in Madrid so far, but other regions in Spain, such as Cantabria, are exploring similar tax incentives for non-residents. The Cantabria proposal, still under review, would focus on investments in local assets, including real estate that is not intended for residential or tourist purposes. While Madrid’s law is more broadly focused, this reflects growing regional interest in offering competitive tax breaks to attract global talent and investment.
The “Mbappé Law” is an ambitious move by the Community of Madrid to attract foreign investors and professionals, particularly from the sports sector. The 20% deduction provides a clear financial incentive for individuals to relocate, and it is expected to boost Madrid’s position as a leading global hub for investment and talent. By learning from the success of the “Beckham Law,” the new law aims to make Madrid an even more attractive destination for investors and professionals looking for tax-friendly opportunities in Europe.
Tax planning for Spain
Besides this new income tax deduction, Madrid already applies a 100% allowance for wealth tax, which effectively means that local taxpayers do not pay the standard wealth tax. Spouses, descendants and ascendants benefit from a 99% relief on succession and gift tax, while relatives such as siblings, nephews, nieces, etc. get a 25% relief.
If you are interested in moving to Madrid from abroad, speak to our specialist tax and wealth management advisers to learn how you can benefit from the local tax regime.
Other regions in Spain have significantly reduced their taxpayers’ liability to wealth and succession taxes, and Blevins Franks can guide you through the local tax rules of your preferred region.
Blevins Franks specialises in providing cross-border integrated advice covering residence, taxation, investments, estate planning and pensions. We can help you plan your move to Spain to mitigate taxation as much as possible and discuss effective wealth management solutions for living in Spain. Whichever region you live in or move to, we can recommend strategic financial planning solutions to protect your wealth from unnecessary taxation. Many of our clients are pleasantly surprised by how much tax we can save them by using compliant arrangements to restructure their assets.
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