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How to buy a property in Spain using a company

BUYING IN SPAIN IN THE NAME OF A FOREIGN COMPANY

BUYING IN SPAIN IN THE NAME OF A FOREIGN COMPANY

In order to be able to buy the property in the name of a foreign company, this company must be registered in the Spanish Tax office and obtain a Tax number (similar to the NIE for individuals).

For this, please, note the process and the requirements needed as per below:

FIRST.- Legalization of documents in the country of origin. In order to start with the registration of the company in the tax office is necessary to obtain the Statutory Documents (Memorandum & Articles of Association / Certificate of Incorporation etc ) from the company and with the number of registration in the Foreign Companies registry.

These documents must be translated into Spanish by an official translator and apostiled with the International Stamp (called “Apostile” from La Hague Convention) at the Foreign Office.

SECOND: Registration of the documents at the Spanish Tax Office.- Once we have the documents translated and apostiled, we will present them at the Tax office in Spain to get the Tax identification number from the company.

With the Tax Number + the documents of the company translated and apostiled we will be in the position to sign the deeds of the purchase in the name of the company

THIRD: Other requirements:

  • The Tax Number + the documents of the company translated and apostiled are necessary to OPEN an BANK ACC in Spain in the name of the company, which we think which can only be opened by the legal representative of the company (GM or Administrator)
  • ALL the payments for the purchase must be paid from the bank account of the company. Transfers coming from individual bank accounts may not be allowed.
  • ONLY the GENERAL MANAGER of the company, with enough faculties to buy in the name of the company, is authorized to sign the deeds of the purchase. The GM will need also a NIE to sign the deeds in the name of the company.
  • To complete the sale is OBLIGATORY to name a TAX REPRESENTATIVE from the foreign Company in Spain, and keep it while the company owns the property.
  • EVERY YEAR, the TAX representative must prepare the TAX declaration of the company which will pay as NON Resident Company (exactly the same as per individuals +- 0,50 % of the tax value of the property).

EXTRA FEES FOR THIS EXTRA SERVICE: Apart of the services for the conveyance,  on this acquisition, please, note the following costs  for the registration and tax representation on your company name:

  • Registration and obtaining of the Tax identification number in Spain
  • Company Tax representation on completion of this sale in the deeds of the sale
  • Yearly Tax Representation

The decision to buy with a company or individual is very personal. But, in order to helping you to decide:

–       TRANSACTIONS WITH THE PROPERTY:

  • If you own the property with a company, you can sell the property just selling the shares of the company. So, you would only pay the taxes on the country of origin for this transaction, but in Spain, the buyer will not pay Spanish taxes on the purchase, and you will not pay Spanish taxes on the sale (Capital Gains). Taxes in Spain on the purchase and/or on the sale, will be paid only in the case in which the buyer do not want to buy the company. In this last case, the buyer would be buying the property as a normal transaction in which the buyer pays the purchaser taxes, and the vendor (even being a  company), pays the taxes on the sale (mainly, capital gains).
  • The same for the inheritance. The shares on the company can be transmitted also by inheritance in the country of oirign, and property can be transferred together with the shares to the inheritors not paying IHT in Spain.

These are both the main reason why people use to acquire properties using a company.

(In relation to Spanish IHT advantages, please, click below to read more: https://www.spanishsolicitors.com/ways-to-avoid-or-reduce-spanish-inheritance-tax-analysis-of-the-different-ways/)

–       MAINTENANCE OF THE COMPANY:

  • You have to keep the company running. If the company disappears, can have confusions with ownership determining who owns it, and sometimes difficult to solve.
  • Companies may have debts, or charges,  which will be easily passed to the property.
  • Maintenance costs of the company in UK.
  • Maintenance costs of the company in Spain (Fiscal representative, etc).

–       TIME SCHEDEULE: If you decided to buy using the company, we may take in Spain 2-4 weeks to complete the registration once we have the proper documents.

Please, be kindly invited to let us know if you needed further help and advice.

TLACORP

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