Mbappé Law vs. Beckham Law: Which Tax Regime Is Right for You?

The Mbappé Law is a tax incentive designed to attract foreign investors to the Community of Madrid. It offers a 20% deduction on the regional portion of the Personal Income Tax (IRPF) for investments in financial assets, including bonds, treasury bills, shares in listed and unlisted companies, and contributions to limited liability companies.

However, direct investment in real estate is not permitted. That said, investors can gain exposure to the real estate market through indirect investments, such as SOCIMIs (Spanish REITs) or real estate development companies—provided they do not hold more than 40% ownership or occupy executive positions within the entity.

To benefit from the Mbappé Law, investors must meet the following criteria:
1) No Residency in Spain for the Last 5 Years:

• The applicant must not have been a tax resident in Spain for the 5 years prior to relocating.
• A tax residency certificate from the country of origin must be provided.

2) Maintain Residency in the Community of Madrid:

• The applicant must reside in Madrid for at least 6 years while maintaining the investments.

3) Hold Investments for 6 Years:

• Investments must remain in the portfolio for 6 years, with the option to reinvest gains in other permitted assets.

4) No Investments in Tax Havens:

• Investments cannot be made in entities domiciled in non-cooperative jurisdictions (tax havens).

5) Participation Limitations:

• Ownership in companies must not exceed 40% of share capital or voting rights.
• The investor cannot hold executive or managerial roles in the entity.

The Mbappé Law presents a significant tax-saving opportunity for foreign investors, but it's essential to highlight its restrictions on real estate investments.

As stated, the law explicitly excludes direct real estate investments from its benefits. This means that purchasing residential or commercial properties directly does not qualify for the 20% tax deduction. The goal of the Mbappé Law is to incentivize financial investments rather than direct property ownership.

However, real estate investment is still possible under the tax deductions—as long as it is done indirectly. Investors can benefit by channeling funds through entities such as SOCIMIs (Spanish Real Estate Investment Trusts) or real estate development companies, provided they meet the following criteria:
1) Ownership Cap – Investors must not hold more than 40% of the share capital or voting rights in the entity, whether directly or indirectly.
2) Non-Executive Role – Investors cannot hold executive or managerial positions within these entities.

This structure allows investors to gain exposure to the Spanish real estate market while still benefiting from the Mbappé Law’s tax advantages.

The Beckham Law, officially known as the Impatriate Tax Regime, is a special tax scheme designed to attract foreign professionals and high-earning executives relocating to Spain for work. It offers a flat tax rate of 24% on income up to €600,000, significantly reducing the tax burden compared to Spain’s progressive income tax rates.

To qualify for the Beckham Law, applicants must meet the following criteria:
1) No Spanish Tax Residency in the Last 10 Years

• The applicant must not have been a tax resident in Spain for the previous 10 years before applying.

2) Relocation for Employment or Self-Employment

• The applicant must move to Spain due to an employment contract with a Spanish company or for self-employment under certain conditions.

3) Applies for the First 6 Years of Residency

• The tax benefits last for six years, including the year of relocation plus the following five tax years.

1) Target Audience

• The Beckham Law is designed for high-earning employees and self-employed professionals relocating to Spain for work.
• The Mbappé Law is aimed at investors and high-net-worth individuals looking to benefit from tax deductions on financial investments.

2) Tax Benefit

• Beckham Law: Flat 24% tax rate on income up to €600,000.
• Mbappé Law: 20% deduction on the regional portion of the Personal Income Tax (IRPF) for qualifying investments.

3) Geographic Scope

• The Beckham Law applies nationwide, meaning it is available to anyone relocating to any part of Spain.
• The Mbappé Law is exclusive to Madrid, requiring beneficiaries to reside in the Community of Madrid for at least six years.

4) Duration
Both tax regimes last six years, but with key differences:

• The Beckham Law applies immediately upon relocation.
• The Mbappé Law requires maintaining residency and investments in Madrid for the full period.

5) Eligibility

• Beckham Law: Available to individuals relocating for employment or self-employment.
• Mbappé Law: Designed for investors in financial assets (excluding direct real estate investments).

6) Incompatibility

• The two laws are mutually exclusive.
• If you opt for the Beckham Law, you cannot claim the Mbappé Law, and vice versa.

Both the Mbappé Law and the Beckham Law offer compelling tax advantages for foreign investors in Spain, but the right choice depends on your financial goals and residency plans.

If you’re an investor looking to optimize your tax burden on financial assets and plan to reside in Madrid, the Mbappé Law provides significant deductions.

If you’re relocating to Spain for work, the Beckham Law offers a flat 24% tax rate, making it an attractive option for high-earning professionals.

At UTRUST, we specialize in tailored legal and tax strategies for foreign investors, ensuring they maximize their investment in Spanish real estate.

Contact us at info@utrust.es or schedule a complimentary consultation through the link here to explore a tailored tax and real estate investment strategy that fits your needs.