Spanish company to hold property

I am looking into the possibility of buying some properties in Spain for investment purposes. Is it better from a tax point of view to do this as an individual or as a company? D. Searle, Brighton UK

From an investment point of view the company option must be considered. The main reason is that the company offers the possibility of organising the business in a more professional way, keeping it separate from your private assets. The company will pay corporation tax when disposing of the property of 25-30% which is higher than personal tax at 18%. This is perhaps the only downside of the company option. The company structure is exempted from the annual Wealth Tax and Income Tax for non resident individuals, which means that usually for more than €600,000 it could be more efficient to run the properties using a company. From an Inheritance Tax point of view the company may offer more opportunities to organise your estate planning, if we organise the shareholding efficiently or use international structures and trusts. Another advantage of using a company is that the company will be able to rent the properties and claim the original VAT paid if a proper trading activity is registered for tax purposes. Capital allowances or depreciation can be claimed as a deductible expense in yearly bases if the company files accounts statutorily, which will reduce the capital gains tax payable over time. Management expenses can be also offset against income and the directors can draw a salary too. It is always worth asking your adviser to outline the difference between company and private acquisition in your particular case, before starting a property investment portfolio.

Spanish Wealth Tax Farewell

If the PSOE wins the elections the Prime Minister Mr Zapatero has promised to eliminate this tax and this is also the position of the PP leader Mr Rajoy.

Therefore it is quite likely that this 31st December 2007 the Spaniards and the Non Residents with property and assets in Spain be submitting their last wealth tax return.  This tax has been the largest obstacle for international people to establish a residence in Spain. Therefore we are very happy to see the tax going.

Adios Impuesto de Patrimonio.

Please keep watching this space.

Adios Impuesto de Patrimonio in SPain.

March 9th, 2008 the day of the next Spanish general elections will mark the end of the  Spanish Wealth Tax.