Buying a Spanish Property into a UK Ltd Company, legal?

Buying a Spanish Property into a UK Ltd Company, legal?

Buying Spanish Property into a UK Ltd Company legal?

Is buying a Spanish Property into a UK Ltd Company legal? Well the very simple answer to that is YES; and no….

So with that in mind I’d like to take a look at the pros and cons of buying a Spanish Property into a UK Ltd Company.

Since 2018 I’ve been working with Wincham International, a company who specialize in this very thing, but to be honest I’ve concentrated my efforts on building up my portfolio and selling property and I haven’t taken much notice of the UK Ltd Company side of the business, so to help me get a better understanding of the whole thing I thought I’d take a look through the information and share my findings with you.

Pros:

“British companies are not subject to Non Resident Taxes as they submit their tax declarations in the UK.

If the purchased property is rented out or used for business purposes, all of the income will need to be declared in Spain, on a quarterly basis with a 19% tax rate.

If the administrator of the company was to die, there would not be any Spanish inheritance taxes involved as there would be a transfer of the shares in the UK.”

It is possible to appoint a Nominee Director of the UK Ltd Company.

It is possible to off-set certain running expenses associated with the company/property.

If you buy a property that is already in a UK Ltd Company there is no property transfer tax to pay and this can be anything from 6%-10% of the purchase price.

Cons

“It’s not illegal to buy a Spanish property through a UK limited company if you have a genuine commercial reason for doing so.

In the past, schemes were set up which encouraged UK residents to buy properties in Spain and transfer them to a limited company to avoid Spanish Inheritance tax. As far as the Spanish Tax Office are concerned these are personal purchases disguised as commercial purchases in order to avoid tax.

So in their opinion this is blatant tax evasion and could be subject to criminal prosecution and heavy fines. The Spanish authorities are actively investigating Company owned property assets to wipe out this very practice.

In 2018 the Spanish tax authorities set up a new Beneficial Owners Register – each country has its own register that must list the Ultimate Beneficial Owner of the company that owns the property.”

So there you have the idea, but regardless of the pros and cons of Buying a Spanish Property into a UK Ltd Company there are other important factors to consider:

Spanish Tax Implications

“Spain has wealth taxes, gift taxes and succession taxes, so you need to take specialist advice to understand the most tax-efficient route to purchase based on your particular circumstances.

Taxation in Spain is complicated and you could incur fines or penalties if you miss a deadline or fail to do your taxes properly.

The key tax implications for non-Spanish residents who are shareholders of a company that owns real estate assets are:

If the property is available to staff, directors or shareholders, they should pay a market rent to the company.

If no rent or a subsidised rent is paid, the Spanish tax office could potentially claim tax on the deemed rental amount.

The company in turn, is required to pay a non-resident ‘corporation’ tax.

Distributions of profit to the shareholder (if any) may be liable for Spanish income tax at the savings income rates.

Rental income and any capital gains are taxed in Spain at company level, applying the tax rate for non-resident companies of 19%.

Spain also has a wealth tax. Non-Spanish residents are only liable on their Spanish assets and rights. However, note that Spain’s double tax treaties with the UK include a clause allowing Spain to tax shareholdings of foreign companies which mainly own Spanish real estate. In this case individuals resident in the UK would be liable for Spanish wealth tax on shares in the company, despite it being based in the UK.

Company assets are subject to Spanish succession and gift tax if it does not have a genuine economic activity and is merely a holding company for owning a Spanish property. The Spanish tax authority has shown in the past it will not accept the use of a non-Spanish company to hold property in Spain purely to avoid succession tax – i.e. the Spanish property will be fully subject to tax.

You may need to appoint a Spanish based ‘Fiscal Representative’ to act as the company’s official contact in Spain, they will deal with the filing of any annual returns and accounts required by the Spanish authorities.”

Set Up and Running Costs:

It goes without saying that it costs money to save money and Buying Spanish Property into a UK Ltd Company is no different.

To give you a rough idea of the set-up costs I can tell you that Wincham International will charge in the region of 8,000€ or 7,000GBP to include a property with a value of up to 250,000€ into a UK Ltd Company and it will cost anything up to 1,000€ per year to submit your yearly accounts.

Summary:

Now I ask myself, would I buy a Spanish Property into a UK Ltd Company and I suppose that would depend on the value of the property and how I plan to use it. If the property costs more than 250,000€ let’s say around 500,000€ and I plan on renting it out to generate a yearly income then I would say yes I’d be interested, but if the property costs less than this amount and it’s purely for personal use, then I’d say it’s not worth the cost or the risk.

In closing,

I hope that the information has given you an insight into Buying a Spanish Property into a UK Ltd Company and if you’d like find our more from Wincham International then just click here.

If you like to know more about me click here.

Cheers,

JP

Photo by:

Photo by Andrea Piacquadio: https://www.pexels.com/photo/happy-senior-businessman-holding-money-in-hand-while-working-on-laptop-at-table-3823487/

Quoted excerpts in this post taken from:

https://sun-lawyers.com/

https://caseron.co.uk/

 

 

 

 

 

 

 

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