Spain Priorities: Football it is!

If anyone has any doubt on the priorities in Spain, its getting reconfirmed again- football it is!

The latest buzz surrounding Real Madrid's pursuit of Kylian Mbappe indicates that the Spanish government is gearing up to implement a new tax legislation, dubbed the 'Mbappe Law,' aimed at easing the financial burden for the club in securing the PSG star's signature. The autonomous government of the Madrid region is rumored on the verge of passing this legislation, signaling a strategic move to facilitate Real Madrid's acquisition of the 25-year-old football sensation.

While Mbappe's transfer is set to be officially categorized as a free transfer, it is expected to involve a substantial signing bonus, potentially breaking world records, and a colossal salary package. Such financial arrangements could strain Real Madrid's financial resources to their limits. However, the proposed 'Mbappe Law' seeks to address this challenge by offering tax relief to both the player and the club, thereby streamlining the process and mitigating the financial obstacles associated with the deal.

Mundo Deportivo elaborates on this development, stating, "The Community of Madrid is processing the approval of the so-called Mbappe Law that will eliminate regional personal income tax for foreigners who settle in the capital of Spain and carry out investments. If the Law passes and Real Madrid complete the signing of Kylian Mbappe, the France star will pay 24.5% of personal income tax, only 2% more than what workers who earn between €12,000 and €18,000 gross per year." This move is strategic not only in securing Mbappe but also in ensuring that his financial package aligns with the club's structure, minimizing the potential wage disparity that could arise post-transfer.

The proposed 'Mbappe Law' draws parallels with the historical 'Beckham Law,' which Real Madrid successfully advocated for in 2005 following David Beckham's signing from Manchester United. This legislation introduced a fixed personal income tax rate of 24% for foreigners relocating to Spain for work, irrespective of their income level. This regime is still in place for people moving to Spain due their work under certain conditions, yet now has a limit of 600.000 EUR on income, way below usual football star package, yet nowadays commonly used by “regular” expats in Spain.

The implementation of the 'Mbappe Law' thus follows a precedent set by Real Madrid, emphasizing the club's proactive approach in navigating regulatory frameworks to secure top-tier talent.

Source: What is the Mbappe Law? Real Madrid signing to get tax break from government | FootballTransfers.com