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Soy... un hombre

Vivo en... Hale/La Cequilla Nueva Andalucia


Trabajo de... Inheritance Tax Consultant Spain


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11 Apr 2008 2:40 PM:

Hi PLH

If you were to create a UK limited company you would loan the property to the company without attracting the 7% transfer tax (this is because you currently own the property, and in the future you would own the company which would own the property - therefore in the eyes of the authorities the property has not transferred hands). Once this has been organised you would be able to take advantage of the tax breaks detailed in my previous post.

Each year it would be necessary to submit the Company Accounts to Companies House and to submit Corporation Tax forms. This is not a complicate task, although I use a professional who charges between £100 and £350 per annum and they submit all paperwork to the relevant bodies. In my situation the annual cost roughly equates to the annual Spanish Wealth Tax I would be liable for by owning the property as an individual.** EDITED - Please respect terms of posting **




This message was last edited by STalbot on 4/11/2008.

This message was last edited by EOS Team on 4/11/2008.
Thread: Make huge savings buying property in Spain

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11 Apr 2008 12:30 PM:



This message was last edited by STalbot on 4/11/2008.
Thread: Make huge savings buying property in Spain

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11 Apr 2008 12:30 PM:

Hi Rixxy,

I’m glad to hear you agree that buying a Spanish property in a UK limited company is fine. I don’t understand your subsequent comment regarding a rental agreement. My comment would be that owning a Spanish property in a UK Limited company does not require the company to pay Spanish Tax, on the income, as a non UK domiciled person would pay.

I totally agree with paragraph three, by investing the Spanish property into a UK limited company avoids the issue of Inheritance Tax in Spain.

I know it is possible to raise finance on a property in Spain owned by a UK limited company. I have one, as do many of my friends and colleagues who have their properties financed by Spanish banks. It can be slightly more difficult to raise finance but it can be gained.

If you wish to sell the property from the company, everything is treated the same – the company pays the 3% withholding tax in the same way an individual would. If you sell the shares of the company there is no 3% tax to pay, and additionally the UK government have made it very beneficial by only charging 9% Capital Gains Tax on the first million of shares sold.

To give an example

€300,000 property owned by an individual.

Cost to the Purchaser                         Legal Fees                          3,500

Land registry 1%           3,000

Purchase tax – 7%         €21,000

Total                            €27,500

 

Costs to the Seller                              Withholding Tax 3%           €9,000

                                                                Plus Valia Tax                     €400

                                                                Total                                      €9,400

€300,000 property owned within a UK limited company

Costs to the purchaser                       Legal Fees                         €7,000

                                                                Land Registry 1%              €3,000

                                                                Total Purchase                 €10,000

 

Costs to the Seller                              Withholding Tax 3%          Nil

                                                                Plus Valia Tax                     Nil

                                                                Total                                      NIL

By selling the shares of a UK limited company the seller doesn’t incur any Spanish tax deductions. Agreed there small legal costs to cover the sales and purchase agreement, but these really would be nominal costs without the need to involve Spanish Notaries.



Thread: Make huge savings buying property in Spain

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10 Apr 2008 3:27 PM:

Hi Rixxy

Can I ask, are your thoughts based on the idea that you buying it and selling it through the UK company ?

As for people not wanting to own a UK company, surely they would simply transfer the ownership into their own names and pay the 7% transfer tax, which they would have done anyway if the vendor of the property sold it in their own name ?



Thread: Make huge savings buying property in Spain

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09 Apr 2008 5:24 PM:

Hi Maria

no, I mean the annual wealth tax you have to pay as an individual



Thread: How to avoid Spanish Inheritance Tax

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