Buying a property in Spain using a company: Analysis of the different ways

There are determinate legal companies in internet offering solutions for foreigners who buy a property in Spain, in order to facilitate the same transaction of the sale, and/or to reduce or to avoid Spanish taxes.

Before you decide to go you should consider the following analyzing  some of the following cases:

A+B, foreigners, they want to buy a house in Spain: Alternatives offered in the market:

1.- To create a Spanish company: A+B must create a Spanish company, and transfer the property into the Spanish company:

  • Expenses to create the company: +-3.000 EUR
  • Yearly expenses to run the company: +-3.000 EUR
  • Expenses to pass the property to the company:
    • 7-8% Transfer Tax = 300.000 * 7% = 21.000 EUR
    • Notary and Land Registry = 1.200 EUR
  • If A+B they are not Spanish residents, they need to name a Legal and fiscal representative in Spain. The expenses and fees for this representation would be of 3.000 EUR, yearly, which should be added to the above costs.

2.- To create an off-shore company or trust, and transfer the property to the off-shore company:

  • Expenses to create an off-shore company:  ?- Depends on the off-shore country.
  • Yearly expenses to run the company in the off-shore country: ?
  • Yearly expenses to run the property in Spain by an off-shore company:

§   Fiscal representative :+- 3.000 EUR

§   General expenses: +- 3.000 EUR

§  Spanish Income Tax for off-shore companies : 3 % of the              catastral value (every year)

  • Expenses to pass the property to the company:

o    7-8% Transfer Tax = 300.000 * 7% = 21.000 EUR

o    Notary and Land Registry = 1.200 EUR

3.- To create a Foreign company and transfer the property to that Foreign company:

  • Expenses to create a Foreign company: It depends on the country of origin
  • Yearly expenses to run the company in the foreign country: ?
  • Yearly expenses to run the property in Spain by a Foreign  company:

-         Fiscal representative in Spain :+- 1.000 EUR

-         General expenses: +- 3.000 EUR

  • Expenses to pass the property to the company:

-       7-8% Transfer Tax = 300.000 * 7% = 21.000 EUR -       Notary and Land Registry = 1.200 EUR

 

Why is benefitial to buy a property in Spain through a Spanish property over all these expenses?:

Because, at time to sell the property, there will be a reduction in taxes:

Case1.- Spanish company: If the owner decides to sell to an eventual buyer, the buyer can opt to buy the property, or the buy the company:

- If he decides to buy the property, he will pay, between others, 7-8% Transfer Tax.

- If he decides to buy the company, then he will only pay the 1 – 1,2% Stamp duty.

Case 2, and 3.- Out of the expenses to change the partners and/or ownership of the property in the foreign-offshore country, in Spain will not be any taxes involved in the sale of the property.

Written by Solicitor

1 Comments to “Buying a property in Spain using a company: Analysis of the different ways”

  1. admin says:

    Very informative. I was offered one of these solutions from my previous lawyer, and he never explained in such detailed way. Thank you

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