Alright, so a disclaimer: This is a post to educate individuals, fans and people of all sorts who have no or very little knowledge regarding finances and tax filings.

Here's how tax works currently in Spain, its divided into two categories: State tax and Regional tax:

  1. State tax: A person has to pay tax to the state of Spain in an increasing tax bracket rates that goes upto 24.5% maximum limit of your taxable income.
  2. Regional tax: A person has to pay depending on which state he resides in an increasing tax bracket rates that goes upto 22.5% to 25.5% maximum limit of your taxable income.

After the 'Mbappe law':

  1. State tax: Remains the same.
  2. Regional Tax:
    • A person that resides in Madrid city can deduct 20% of his investments made in the city over the span of the year. Madrid City's regional tax remains unchanged at 20%.
    • So effectively you can deduct all of your regional tax as free but its practically impossible because you have to pay state tax regardless, leaving you with 75.5% of money remaining.
    • So only 15.1% can be deducted assuming you have 0 daily bills, which again is an impossible feat. Hence, a generous 10% can be considered a practically best figure of deductible break.

A new law, called 'Mbappe Law' story is soon going to be posted across social media. Its complete non consequential.

So Community Of Madrid is sending a bill to the assembly according to which if proved, all foreigners who come to Madrid for a period of 6 years will enjoy a tax break of regional government tax (20.5% highest bracket rate) on investing money in the Madrid state. (cannot be real estate investments, only companies, and state bonds)

So anyone including footballers, doctors, lawyers, simply put any foreigner who come and stays in Madrid can save money if they invest money in the city to boost the economy.

The bill dictates, that you can deduct 20% of your investment made as tax deductibles but its practically impossible to achieve that figure unless you invest money from your saved up personal taxed cash of the past rather than your yearly income.

Here's an example to give an overview of the change:

  • Mbappe gets 30M gross salary by Real Madrid, he will have to pay 24.5% tax as does everyone in Spain's highest tax bracket non-negotiable. (approximately 7.35M but little less because highest bracket is only accessibly on the figure after 300,001 euros)
  • Then Mbappe will have 22.65M left with him, with which he will pay for his daily bills and such. He may even purchase houses, cars, planes, travels, dinners and every imaginable expenses.
  • Say, he invests 10M in Madrid city (very very generous figure – because footballers enjoy a super luxurious lifestyle), he can deduct about 2M of from tax break.
  • So instead of paying 7.35M + 6.15M = 13.5M
  • Mbappe will pay 7.35M + 4.15M = 11.5M

His net salary goes from 16.5M to 18.5M. the bill is not made for Kylian Mbappe specifically but rather as an incentive to boost foreign investment in Spain (Madrid) so to boost the local economy.

But rivals and haters from around the world will use this story to prop up their daily Madrid PR bullshit. So this is a reminder that the story is non consequential and should be buried already.

Btw, law has not been passed yet. And the law is applicable for all foreigners in Madrid so the clubs like Atletico Madrid, Real Madrid, Leganes, Getafe and other football clubs in Madrid can enjoy the benefits of this bill if passed through the assembly put for vote.

A final note, and request: Please like and re-tweet this post (https://twitter.com/BotGoneWrong/status/1782830377326858599) so that all Madridistas outside from Reddit platform can learn about the breaking of this myth.

Thank you.

by ToastedCupboard

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