Bernardos criticizes community of Madrid over potential Mbappé signing tax benefits

The possible signing of Kylian Mbappé by Real Madrid has sparked a heated debate beyond the football pitch, reaching the financial offices of the Community of Madrid.

According to AS, economist Gonzalo Bernardos, along with other critics, argues that the Community of Madrid is providing fiscal advantages to certain players and their clubs, specifically pointing to the French star.

The ‘Mbappé Law’ Controversy

Bernardos’s criticism centers on reports suggesting that the Community of Madrid is planning to introduce a new law, dubbed the “Mbappé Law,” which would reduce the personal income tax (IRPF) burden for foreign investors.

This legislation, if enacted, would allow high-profile players like Mbappé to benefit from substantial tax deductions, reminiscent of the infamous “Beckham Law.”

Isabel Díaz Ayuso’s Response

Isabel Díaz Ayuso, the president of the Community of Madrid, defended the proposed tax benefits. She argued that since the national government is not reducing state taxes, it falls on her to lower the autonomous part of the taxes.

“The Government does not want to lower state taxes, therefore, it will be up to me (Isabel Díaz Ayuso) to lower the taxes of the autonomous part,” she stated. Currently, the personal income tax in Spain is split into two parts: the state portion (24.5%) and the regional portion (20.5%), totaling 45%. Ayuso’s plan would reduce the regional part, provided the beneficiaries invest significantly in the region.

Economic Implications

According to Bernardos, such legislation would deprive the community’s coffers of substantial revenue, leaving only the state portion of the taxes. He asserts that this measure is tailored to benefit wealthy individuals and entities, such as Real Madrid, enabling them to pay less tax than they would elsewhere in Spain.

He described these fiscal benefits as “hechas a medida” (made to measure) and criticized them for targeting specific groups: “These benefits are aimed at benefiting people and groups, like the white club.”

Historical Context: The Beckham Law

This situation recalls the “Beckham Law,” enacted when David Beckham joined Real Madrid. This law allowed non-residents spending more than six months in Spain to be taxed only on their Spanish income at a flat rate of 24% up to €600,000, and 45% for amounts above that.

Bernardos noted that highly qualified professionals or top-tier individuals benefited disproportionately, paying a lower tax rate than the average resident: “When the Englishman arrived in our country, a new law was launched that allowed non-residents who spent more than six months (183 days a year) to be taxed only on the income obtained in Spain.”

Wider Criticism and Public Debate

The potential enactment of the “Mbappé Law” has ignited public debate about tax fairness and economic equity. In a Catalonia radio video, Bernardos emphasized that contrary to popular belief, not all wealthy individuals pay the highest taxes due to such special tax arrangements for foreign players joining Real Madrid.

“You all think that those who have the most pay the most when the income tax arrives, well not all, because every time a player arrives in Madrid, there is a special system for these foreign players.”

The debate over the Community of Madrid’s tax policies for potential high-profile signings like Mbappé highlights broader issues of tax equity and fiscal policy. While Ayuso defends the measures as necessary for economic competitiveness, critics argue they unfairly favor the wealthy at the expense of regional tax revenues.