Buying property through an offshore coporate structure

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This topic contains 5 replies, has 5 voices, and was last updated by Profile photo of Anonymous Anonymous 10 years, 10 months ago.

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  • #51479
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi all,

    I’ve read an article in Sovereign about buying property in Spain through an offshore corporate structure to save on Capital Gains Tax and other taxes.

    Does anybody have any experience in this or know where I can get more information about it?

    Thanks in advance
    Harry

  • #60474
    Profile photo of Anonymous
    Anonymous
    Participant

    Offshore companies are taxed at a 35% rate in CGT and additionaly you are liable for a 3% tax on the rateable value of the property, which can be costly. A Spanish limited company can help you reduce your CGT to 15% if the property is disposed after 1 year. Where shares are sold you are liable for 35% tax, which an offshore would not have as the sale would be taking place precisely in a tax haven. In my experience however very few buyers, if any, are willing to buy offshore companies for the aforementioned problems and lawyers are equally cautious with these after the white whale case.

  • #60491
    Profile photo of marios
    marios
    Participant

    Harry-Dont do it full stop,I believe you also have to pay fees to keep the so called Co going.

  • #60549
    Profile photo of Anonymous
    Anonymous
    Participant

    Harry,
    I have purchased an offshore company in Gibraltar and in my opinion it was a big mistake. While I must take responsibility for my own actions, I feel that I was badly misled by a Gibraltarian solicitor.
    He knew my situation and sold me a completely unsuitable product that I did not need in order to earn ever increasing annual fees. For solicitor here read salesman.
    Every year there are several extra items tacked onto the basic fee which itself is growing. On top of that they changed the law recently to require “proper” accounts be kept. This adds a couple hundred extra quid to the costs, and are not worth the paper they are written on.
    The most stupid part of this is when I asked the solicitor about the legality of the trust, he said to me “don’t worry about it mate -there is no word in spanish for trust” (trust being the offshore set-up I have). I feel really stupid for believing that. If you have a trust, then you are hiding money from the tax payer -this isnt tax avoidence, it’s evasion.

  • #60576
    Profile photo of Anonymous
    Anonymous
    Participant

    Get some expert advice. Offshore Corp structures can work very well, Gib though is a bad move. the Spanish Govt have a list of off shore destinations it recognises and therefore should be avoided (Gib tops the list!)

    The offshore corp structure only works if you are in it for the long term as the management fees are high. Thus if you think you might want to sell before then, again avoid as you will be wasting your money.

    But as with anything it may not be forever as laws change, unfortuntley you can’t have your cake and eat it.

  • #60577
    Profile photo of Anonymous
    Anonymous
    Participant

    I know a lady who bought an offshore company that owned a juicy plot of land, frontline beach near Marbella (that was all it owned). Her plan was to build a villa on it one day.

    Sometime later, the owners of the hotel next door decide they wanted that land.

    They had someone pretend to be a director of the offshore company, who somehow managed to trick a British Notary to sign some papers to this effect, and then went before a Spanish Notary and signed over legal title to the hotel for a song.

    It’s not a big risk of owing through an offshore company, but it could only happen under those circumstances. If title is in your own name, or a Spanish company name, this kind of fraud would be much more difficult, impossible even.

    But like I say, it doesn’t happen much. I’ve only heard of the one case.

    Mark

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