14 Sep 2011 11:02 AM:
I have been reading Eye on Spain for a long time but haven't posted before so "Hi".
First things first - cards on the table. I am an English Lawyer who has been dealing with Spanish Law for over 17 years. I have helped many people buy and sell properties and have advised them on which is the best form of ownership for them. I thought it was important to mention that so that everybody knows who I am and that there is accusations of secret agendas.
I beleive that the form of ownership is one of the most important decisions that you can make when buying a property abroad (Spain or elsewhere). Getting this wrong can cost you thousands of pounds in extra tax or costs. However, there is no "one size fits all" as everybody's circumstances are different. I have advised some clients to buy inthe name of UK companies. I have also advised some clients that that is the worst thing that they could do. It is important to look at the circumstances of the case and the impact both in Spain and the UK in terms of taxes and costs. You need to look at what you are trying to acheive, your timescales, your personal circumstances and also your inherutance wishes.
Buying through a UK company does have its advantages - mainly in terms of Inheritance tax and capital gains tax in Spain. A UK company will also normally be excempt from the 3% Special tax on foreign company ownership in Spain. However, you need to balance this against the cost of running the company each year. In many cases the tax savings can be acheived (or at least significantly reduced) in other ways. It is important to balance out all the options and then work out which is the most cost effective. In some cases I have seen that the cost of running the company for many years outweighs the tax savings!
It is also important to remember that not everybody wants to buy in the name of a company. If you do it can be disadvantageous for the company to sell the property when you want to dispose of the property rather than you selling the company (which in turn owns the property). It would be interesting to see whether the seller in this case would be willing to have the company sell the property rather than to sell the company. If he isn't then he is going to limit the number of potential buyers he can reach. This would also be a problem for the new buyer if they bought the company. Ask the question and report back to us - I would be interested to know as I have had purchases fall through because of this.
Companies can make sense for some people but not everybody. I tend to like to keep things simple as that way people understand what is happening and any future buyers can as well. I tend to use companies for clients buying higher value properties rather than the sort thatt the average man in the street would buy.
The main message is that each person's circumstances are different so what is right fro one may not be right for another.
Peter Esders
Chebsey & Co
Thread:
Purchasing a property with a UK company
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