“The Mbappe law” – How the Madrid government will help Real Madrid sign Kylian Mbappe with a new tax law
Real Madrid looks set to sign him Kylian Mbappé on a free from Paris Saint-Germain this summer, and while the French striker could undoubtedly earn more elsewhere, there is no doubt that he will become the highest-paid player in Real Madrid's history. Likewise, he is preparing to give a practical tax ruling just before signing.
According to Relief, a new tax law that is being implemented in the Madrid region, which is already known as the “Mbappe law”. This would be the second known piece of tax legislation after a Real Madrid player, after the “Beckham law”, which also saw foreigners pay less tax.
The resulting law, proposed by the Popular Party last year, and to be put to a vote this new year, will see foreigners who invest pay up to 20% less tax on their earnings in the Madrid region. Equivalent to the amount of 20% of his investments, were Mbappe to earn 20 million euros a year at Real Madrid, and he invested 20 million euros, he could receive 20% of that return in tax rebates, equivalent to 4 million euros.
As a high earner, Mbappe would be taxed close to half of his salary if he did not invest, but with that 20% discount, he would only pay 24.5% – the same amount that a worker earns only 24 thousand € per year. For context, the average salary is just over 31 thousand € per year in the city of Madrid.
It could be a significant pay rise for Mbappe if he wants to take advantage of the prospective law, and it is expected that he could be one of 30,000 people who move their tax domicile in the city as a result, presumably mostly high earners.
Of course, the people pushing the legislation, the Popular Party Mayor of Madrid Jose Luis Martinez-Almeida and the president of the Community of Madrid Isabel Diaz Ayuso, are well known to the president of Real Madrid Florentino Perez. The trio shared a table with Tom Brady on Monday night at the Laureus Awards, and the two were spotted in the manager's box with Perez during Real Madrid's clash with Manchester City.
It is not the first time that the close relations between the main politicians in Madrid and Perez have been reported. In spite allegedly breaching environmental regulations and planning permission, the Madrid City Council is pushing forward 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 of Real Madrid, and the Real Madrid Estadio is expected to make a profit of 500 million euros over the 40-year lease.
Image via Matthieu Mirville / Dppi / Afp7 / Europa Press
