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.
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Make huge savings buying property in Spain
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