11 Jan 2017 8:00 PM:

Hello Donna & Members,

One way to buy a Spanish Property is to buy it within a UK Limited Company structure.

If the Buyer and Seller agree with the transaction the 8-10% Property Purchase Tax can be saved in Spain to the Buyer.

Once the UK Company has the Spanish property placed into it as an investment in exchange of shares by the Seller, the Buyer then takes ownership of the UK Company with the property already held within it saving the Buyer the  8-10% Property Purchase Tax.

If the UK Company is then resold in the future to another Buyer then not only does it save the 8-10% Property Purchase Tax to the future Buyer, but it also saves the non Resident Seller having to pay the 3% non Resident Withholding Tax to Spain Tax Office.

Also a UK Limited Company that owns Spanish property does not have the annual 3% Off-Shore Tax like Gibraltar, Isle of Man, Jersey, Guernsey, etc. Companies owning Spanish property, so extra savings here.

 

This message was last edited by Property On Finca Parcs on 11/01/2017.
Thread: Cost of House Purchase

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25 Sep 2011 5:02 PM:

Dear kev2006n,

I believe I can clear up your comments about my Company Westholme Corporate Developments Limited and Wincham Consultants Limited having the same UK address. The structure of my UK Company is that I am a Shareholder & Director of my Company which means I have ownership and full control and responsibility for it. A UK Company also requires a UK Registered office/address and a Company Secretary and these services for my Company are provided by a Company called Companies 4U which is a subsidiary Company within the Wincham Group and who is a Companies House Formation Agent and offers professional services for new start UK Companies/businesses. This would suggest to me that all the Companies within the Wincham Group will have the same UK Registered address and most likely the majority of their client's Companies so you will probably find lots of UK Companies with the same UK address that you have mentioned. I do not believe this is an uncommon situation in the UK Accountancy world.

norm de plume, has made the comment about Residents and non Residents being Taxed evenly in Spain but due to Spain's serious financial issues could it not be suggested if Spain do make it a level platform for Inheritance Tax that they bring Residents Tax up and in line with non Residents, appose to dropping the non Residents Tax. One thing Spain can count on is property owners passing away and Taxes being paid by the Beneficiaries so it would not be a financial advantage to them to loose the huge sums collected by dropping it.

Spain did have to drop Capital Gains Tax for non Residents to 18% to match that of Spanish Residents but in 2010 Spain increased it back to 19% and it goes up to 21% for Residents in some Tax situations.

Thread: Purchasing a property with a UK company

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17 Aug 2011 2:32 PM:

Hello Faro,

The European Treaty is there to allow international trade between Countries within the European Community, the treaty allows a Company from a European County to operate within any other EU Country and the Company can decide in which jurisdiction it would like to pay it's Tax. This can be the Country in which it is operating (Spain in this case) or the Country in which it is registered (the UK in this case)

I will demonstrate below ::

A UK Limited Company has to have a CIF number to operate in Spain which is supplied by the Tax office in Spain.

The UK Company will request a Certificate of Residence from the Tax office (HMRC) in the UK demonstrating it is a Tax Resident Company of the UK.

Once a UK Company owns a property in Spain the Company has a legal obligation to submit a Zero Tax Declaration every January to the Tax office in Spain for the ownership of the property.

When the UK Company Tax Declaration is submitted to the Tax office in Spain, along with the Company UK Certificate of Resident then under the EU Treaty, Spain has to accept the Company is a non Resident Company of Spain and cannot Tax the UK Company.

The above is how every UK Company can operate in Spain and I do not see how at any stage you are hiding anything from the UK or Spanish Tax Authorities, quite the opposite I think, this is also part of the due diligence gwm will have to make sure the UK Company has been doing when gwm looks at purchasing the UK Company mentioned which owns the property in Spain.

In relation to a trading UK Company then I am not suggesting it will be for everyone but it is an additional advantage for those who wish to take advantage of it. I know of a lady and gentleman who own in Algorfa, Alicante, and when they bought their Spanish property into a UK Company structure they then setup a dog grooming business which operated through the same Company and when they submit their Company accounts to the Tax office in the UK they are classed as a trading Company, no problem here.

 

This message was last edited by Property On Finca Parcs on 17/08/2011.

This message was last edited by Property On Finca Parcs on 17/08/2011.
Thread: Purchasing a property with a UK company

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16 Aug 2011 7:28 PM:

Dear Faro,

I have answered directly to the Post by gwm on the 16th July and also the Post on the 13th August as it looks like gwm may be purchasing a Spanish property already in a UK Limited Company structure and he is looking for comments and reference to this type of ownership.

It is important to understand that owning a property in Spain in a UK Limited Company is not a UK or Spanish Law but a European Treaty that both Spain and the UK are bound by and they cannot make local laws that overrule EU Treaties. This is proven by a CIF number that a UK Company has to have to operate in Spain just like an individual requires an NIE number and also the annual zero Tax Declaration which is accepted by the Tax Office of Spain unlike an offshore Company which attracts the annual 3% for not being within the EU. The UK Company is classed as a non Resident Company of Spain so it has no Tax to pay for the ownership of the property in Spain.

If a UK Limited Company owns a property in Spain and it can demonstrate genuine trading activity then it should be classed as a trading Company in the UK. For example, if the UK Company managed other UK properties and helps collect rent for the Landlords of these UK properties then it can bill those Landlords for management fees, and also the marketing of them if it has helped locate the Tenants, here is genuine trade.

If the owners of the Company which owns the property in Spain are high Tax payers themselves then they can bill some of their income via the UK Company and only pay 20% Company Tax in the UK, appose to a higher personal Tax band themselves, this is also a way of reducing their personal income amount meaning it may reduce their personal Tax band, here is genuine trade.

It would be inappropriate for me to name drop on this Forum but if you are referring to Wincham Consultants then you (Faro) probably have noticed on their website that they were nominated for an award at 'A Place in The Sun Live' at Earls Court in London this year for their services.

Thread: Purchasing a property with a UK company

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16 Aug 2011 1:56 PM:

Hello Gwm,

I own a property in Spain via a UK Limited Company structure and will list some of the advantages that I have.

1. No personal non Resident Tax Declarations in Spain every December for owning the property in my own name but a Company Tax Declaration every January that is submitted to the Spanish Tax Authorities at Zero due to the European Treaties that Spain and the UK have between them.

2. I have removed Spanish Inheritance Taxes for my Beneficiaries as they will inherit the UK Company shares and not the property under Spanish Inheritance Tax Laws of the Central Tax office in Madrid as my Beneficiaries are not Resident of Spain so are not Taxed by the Regional Laws.

3. When I sell the UK Company there will be no 7% Purchase Tax in Spain to the buyer and no 3% Withholding Tax to my Company. If a buyer does not wish to purchase the Company then they can purchase the property out of the Company in the normal way. If the buyer purchases my UK Company then there is only a 0.5% UK Stamp Duty in the UK on the purchase value of UK shares.

4. Shares in a UK Private Limited Trading Company are exempt from IHT in the UK and Capital Gains Tax in the UK when you sell a Trading Company can be at only 10%.

 

 

Thread: Purchasing a property with a UK company

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