PURCHASE OF PROPERTY FROM SPANISH SL BY UK LTD COMPANY

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This topic contains 17 replies, has 7 voices, and was last updated by Profile photo of Anonymous Anonymous 6 years, 9 months ago.

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  • #55384
    Profile photo of Anonymous
    Anonymous
    Participant

    Information required.
    I have a UK ltd company I am a cash buyer and wish to purchase a property from a Spanish company.
    What is the required procedure and what advantages disadvantages with regard to taxes etc. đŸ™„

  • #96000
    Profile photo of Anonymous
    Anonymous
    Participant

    Vilprano

    The information you want is complex

    Contact

    http://www.winchamiht.com/

    For advice

    Steve

  • #96036
    Profile photo of DrRobert
    DrRobert
    Participant

    Nice advert.

    There’s lots of stuff about this on the forum. A Search will bring up the information you need. And not charge you commission.

  • #96318
    Profile photo of Anonymous
    Anonymous
    Participant

    Firstly, sorry for my bad English. But I’ll try to explain what are the requirements to purchase a property in Spain by a British company:

    The steps are as follows

    1 You have to prove that you own a business in Britain. For this, the best and easiest way is that the company’s managing director confers power to buy in Spain. This type of document has to be done by a notary public who is British. The power must have an Apostille.

    2 The company and the agent must have a Spanish tax identification number.

    3 The price must be paid through a bank in Spain.

    4 The purchase document must be signed before a Spanish notary.

    5 th after signing the deed of sale must be recorded in the register of real estate

    6 The buyer must pay the following taxes and charges:
    – 7% of the purchase price
    expenditure:
    – Notary
    – Registration

    To solve all the problems it is best to contact any notary of the place where is located the property you want to buy

  • #96319
    Profile photo of katy
    katy
    Spectator

    I am not familiar with present company tax law in the UK. but I would discuss this with your tax accountant as my Father had a property owned by a family company and I remember there was some problem with the tax authorities, was a long time ago.

  • #96325
    Profile photo of Anonymous
    Anonymous
    Participant

    Dr Robert

    Yes I’am on a huge commision, you proffesional people make me laugh, stick to what you know best please!.(assuming you are a doctor of medicine)

    All

    Its coming up to the first anniversary of our purchase here on the CDS and yes we are still ‘over the moon’ with our home here, one regret is that I didnt use the UK company as a vehicle to do it at the time, but hey you live and learn.

    WHAT IS THE BENEFIT?

    Courtesy of Wincham

    1.Once the company owns the property there is no longer a requirement to have a Will in Spain in respect of this property.
    2.There would be no Spanish IHT Tax payable on the death of the current or future beneficiaries.
    3.There would be no Legal Fees in Spain payable on the death of the current or future beneficiaries.
    4.As the company is a UK PRIVATE LIMITED COMPANY an Executor in the UK can easily deal with the Shares and Loan Account in the company. (The Loan Account represents the funds provided by the Shareholder(s) to the company for the original purchase of the property and the onward financing and running costs of the company and the property, this may also include flights to and from Spain and car hire whilst in Spain.)
    5.There may be significant benefits and tax savings in the UK in respect of UK IHT. We would recommend that you take advice from your own Accountant or Lawyer in respect of your Estate Planning. We do have a panel of experts who could advise you on your options in sheltering your UK company asset in respect of IHT.
    6.Should you wish to sell the property in the future you may consider selling the company with the property in it. This could save the purchaser up to 8% of the value of the property and save you at least 3% Withholding Tax in lieu of Capital Gains Tax in Spain.
    7.Should you become ill or unable to deal with the property during your ownership of the company you would be able to appoint a Beneficiary as a Director of the company and authorise him/her to deal with all matters relating to the company and the property on your behalf.
    8.It is much simpler to involve beneficiaries and partners who are not directly related to you in a company rather than a Spanish Property.
    9.The Company may be able to claim tax relief on expenses attributable to its activities, for example, mortgage interest, council tax, electricity, water, repairs and travelling of the directors. It will be possible for the Company to claim Tax Relief on the fees, expenses and taxes in respect of the Property Transfer transaction.

    Steve

  • #96340
    Profile photo of Inez
    Inez
    Participant

    So, whens the party then Steve?? đŸ˜†

  • #96351
    Profile photo of katy
    katy
    Spectator

    Wouldn’t touch the above company with a bargepole! I think no. 9 is very questionable.

  • #96363
    Profile photo of Anonymous
    Anonymous
    Participant

    To give a good advise about buying a real state property in spain by a UK company, you have to know enough british law and over all spanish law.

    I’m afraid that the advise given by Stevev6 doesn’t match with spanish law in many esential points.

  • #96364
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Gonzalo

    I have not given any advise, please read my posts again, nor have I signed up with any company providing these services.
    My feeling is that I think this is a good option for me and I want to investigate further.

    I am quite clear on the UK end but would need to get advise from the Spanish perspective, idealy from someone who is not trying to make a commsision out of me, we will see.

    S

  • #96397
    Profile photo of Anonymous
    Anonymous
    Participant

    Sorry if I’ve misunderstood your post.
    the mistake is my fault, it is caused for my bad english, sorry again.

    I would like to focus in the item
    May be, to buy a property trough a UK company could be a good idea but you should consider, at least the follow:

    You have to pay the same amount of taxes as an individual.

    If you sell the shares of this company you have to pay the same as if you sell the property.

    When a non resident sells a real state property, the buyer must retain 3% of the price and will have to deposit this 3% and he must enter it in the tax office.

  • #96416
    Profile photo of Inez
    Inez
    Participant

    The most omportant poiint is whether you are spanish resident or not!

    Please, please PLEASE speak to a professional giving good advice!

  • #96417
    Profile photo of Anonymous
    Anonymous
    Participant
    Inez wrote:
    The most omportant poiint is whether you are spanish resident or not!

    Please, please PLEASE speak to a professional giving good advice![/quote
    Hi Inez,
    I was hoping that some person with a knowledge of Spanish/English law and or tax matters could tell me if this was an avenue worth pursuing.
    I would not contemplate this method without sound financial/legal advice of the highest quality.
    Many thanks for the concern.

  • #96419
    Profile photo of Inez
    Inez
    Participant

    Hi Vilparano – I have never said I am a professional in Spanish law or tax system!

    I thought the gestors hee advise but no!

    I had to ask the questions and they answer, BUT they dont offer the avdvise first!! Sorry!!!

    I do know people who have done this – if you are Spanish resident then do not do this as its not now tax advantageous as of last year. If non res then depending if you are UK resident or offshore tax status it depends, so on this basic info I would have no idea. Sorry!

  • #96420
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Inez,
    I am aware that you were not speaking as a professional and only giving a warning.
    This I welcome and thank you.

  • #96421
    Profile photo of Inez
    Inez
    Participant

    Youre welcome mate.

    There has been a few changes, I only know as selling properties involvd and some owners insisting on buying hte Ltds/SLs! Spanish cannot buy and get any protection, non res yes, but times are achanging!

    In Gib fron Jan 1st owners of LTD cos HAVE to pay 10% Taxs, whereas before not! And you have to use a Gib company to set it up too.

  • #96944
    Profile photo of Anonymous
    Anonymous
    Participant

    Dear vilprano

    I have been reviewing all the replies posted and my opinion is this:

    There is not a black or white answer to your question. Most of the answers you have received are correct, but only in certain circumstances.

    For example, it is true that you avoid the payment of the Inheritance tax in Spain buying through a UK company. However, there are other tax implications arised when you buy a property in Spain through a non resident company. Your non resident company would have to pay the “Gravamen especial sobre bienes inmuebles de entidades no residentes “, which is the 3% of the cadastrial value of the property. This tax must be paid on a yearly basis.

    Let’s say for example that you buy a property in Spain for 250.000 €uros through your UK company (non resident company in Spain), and the cadastrial value of the property is 200.000 €uros, It means that your UK company will have to pay 6.000 €uros in taxes every year. If you continue living for 30 years (hopefully more), you will pay 180.000 €uros in taxes (not very good, is it?).

    There are other ways to reduce your inheritance tax, but in my humble opinion buying through a UK company is not the best one.

    If you are considering also to reduce taxes in the event of selling your property by selling the shares of your UK company, you also have to consider that selling the property on that way is much harder than through the ordinary way, as it is much harder to find finance to buy on this way and also there will be many potential purchasers with not much confidence in buying a UK company (it will be harder to accept that method for potential Spanish purchasers, German ones, etc, and also for their legal advisers, even if they will reduce their purchase expenses), so the number of potential buyers will be reduced drasticly.

    In any event, there are so many factors that will affect to create the best costs strategy, and my advice is to find an independent legal advisor who could provide you proper advice after considering all the aspects of your case.

    Best regards

    Javier Moya

  • #96744
    Profile photo of Anonymous
    Anonymous
    Participant

    Dear vilprano

    I have been reviewing all the replies posted and my opinion is this:

    There is not a black or white answer to your question. Most of the answers you have received are correct, but only in certain circumstances.

    For example, it is true that you avoid the payment of the Inheritance tax in Spain buying through a UK company. However, there are other tax implications arised when you buy a property in Spain through a non resident company. Your non resident company would have to pay the “Gravamen especial sobre bienes inmuebles de entidades no residentes “, which is the 3% of the cadastrial value of the property. This tax must be paid on a yearly basis.

    Let’s say for example that you buy a property in Spain for 250.000 €uros through your UK company (non resident company in Spain), and the cadastrial value of the property is 200.000 €uros, It means that your UK company will have to pay 6.000 €uros in taxes every year. If you continue living for 30 years (hopefully more), you will pay 180.000 €uros in taxes (not very good, is it?).

    There are other ways to reduce your inheritance tax, but in my humble opinion buying through a UK company is not the best one.

    If you are considering also to reduce taxes in the event of selling your property by selling the shares of your UK company, you also have to consider that selling the property on that way is much harder than through the ordinary way, as it is much harder to find finance to buy on this way and also there will be many potential purchasers with not much confidence in buying a UK company (it will be harder to accept that method for potential Spanish purchasers, German ones, etc, and also for their legal advisers, even if they will reduce their purchase expenses), so the number of potential buyers will be reduced drasticly.

    In any event, there are so many factors that will affect to create the best costs strategy, and my advice is to find an independent legal advisor who could provide you proper advice after considering all the aspects of your case.

    Best regards

    Javier Moya

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