Spain has long been an attractive destination for high-level foreign professionals, including elite athletes. Over the years, tax measures—though generally applicable—have become associated with global stars like David Beckham and Kylian Mbappé. Hence the references to the Beckham Law and the Mbappé Law.
Both regimes aim to attract foreign talent to Spain through tax incentives, whether at the national or regional level.
The Beckham Law
Origin and Legal Framework
The Beckham Law refers to a special tax regime for individuals relocating to Spain for work purposes. It is regulated under Article 93 of Law 35/2006 on Personal Income Tax (IRPF). Although enacted following David Beckham’s signing with Real Madrid in 2003, the name persists due to his high-profile status as one of the first notable beneficiaries.
The regime has evolved, particularly with the implementation of Law 28/2022 to promote the startup ecosystem, which reduced the required non-residency period from ten to five years.
Tax Advantages of the Beckham Regime
Fixed Tax Rate
Employment income is taxed at a flat rate of 24% up to €600,000. Any amount exceeding this threshold is taxed at 47%.
This is more favourable than the general IRPF regime, where marginal tax rates can reach up to 54%, depending on the region.
Limited Territorial Taxation
Taxpayers under this regime are only subject to tax on:
- Employment income earned worldwide.
- Other income and assets, if they are located in Spain.
Therefore, foreign-source passive income and global assets (such as properties or bank accounts abroad) are excluded from Spanish taxation. Under the general IRPF regime, these would be subject to income tax, wealth tax, or even the temporary solidarity tax on large fortunes.
Eligibility Criteria for the Beckham Law
This regime is available to individuals who become Spanish tax residents and meet the following conditions:
- Must not have been a Spanish tax resident during the five years before the relocation.
- The relocation must be due to:
- An employment contract.
- Appointment as a director of a Spanish company.
- Undertaking an entrepreneurial activity in Spain.
- Providing highly qualified services to a startup or engaging in R&D activities, as long as it generates over 40% of the total income.
- Must not earn income through a permanent establishment in Spain.
The regime applies for the year of relocation and the five subsequent tax years.
The Mbappé Law
Unlike the Beckham Law, the popularly known Mbappé Law is not a national law but a regional tax benefit approved by the Community of Madrid within its IRPF jurisdiction.
What Is the Mbappé Law?
It is a regional deduction of 20% on the IRPF for the acquisition value of investments made in:
- Corporate debt instruments.
- Equity holdings in entities of any kind.
It targets new tax residents in Madrid who have not been Spanish residents during the previous five years.
Conditions to Apply the Mbappé Deduction
To benefit from the Mbappé Law, the following conditions must be met (among others):
- The investment must be made the same year the individual becomes a tax resident in Madrid.
- The target company must not be domiciled in a tax haven.
- The investor may not:
- Hold more than 40% of the company’s capital.
- Exercise executive functions or hold an employment relationship with the company.
- The investment must be held for at least six years.
Conclusion
Spain offers significant tax advantages to attract international talent through frameworks like the Beckham Law and the Mbappé Law.
While the former is a national regime focusing on employment income taxation, the latter is a regional deduction in Madrid linked to specific investments.
Both regimes can result in substantial tax savings if the requirements are met.
It is crucial to seek specialised legal and tax advice before relocating or investing, especially in light of recent regulatory changes.
For further information on tax benefits available to foreign professionals in Spain,
