Consultancy in Spain - Mbappé Law
Smart investments with the Mbappé Law!
- With this law the Community of Madrid seeks to attract investors. Find out about the requirements and how you can benefit from this unique opportunity and get advice from an expert!
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What is the Mbappé Law?
The “Mbappé Law”, proposes a reduction of the regional Personal Income Tax rate (IRPF) up to 20% for new resident investors in the Community of Madrid. The purpose is to offer a more favorable tax treatment to investors with lower incomes.
Requirements to apply the Mbappé Law:
Being a new resident
Not having had tax residence in Spain during the last 5 years.
Residence in Madrid
To have established tax residence in the Community of Madrid for at least 6 years.
Correct declaration of investments
These investments must be properly recorded in the income tax return in order to be able to apply the corresponding deduction.
Compliance with investment criteria
Make an investment that complies with the established requirements:
- The investment must be made in a company located in the Community of Madrid and must be maintained for at least six years.
- The investment must NOT be destined to the real estate sector.
- The investment must NOT be in an entity incorporated in a tax haven.
- The taxpayer's investment must not exceed 40% of the capital or voting rights of the company (directly or indirectly).
- The taxpayer may also not hold executive or managerial roles, nor have an employment relationship with the company.
Mbappé Law or Beckham Law?
Although they are actually two very different laws, for high earning foreign workers, the Beckham Law may be more beneficial. This law is ideal for highly qualified professionals, such as managers, specifically, those earning more than 600,000 euros per year.
The benefits of this law include exclusive taxation on Spanish source income, with the exception of salary, which is taxed globally. In addition, the reduced tax rate of 24% up to the first €600,000, and 47% above that amount, offers significant tax savings.
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