[Anonymous]

I am considering taking advantage of the lately reduced prices of Spanish villas. Are there any issues tied to buying a Spanish villa in the name of a limited company? The villa will be rented out and income declared as revenue in the company. The company is not a Spanish company. Would there be any advantages setting up a Spanish subsidiary owning the villa and getting for instance the Spanish VAT deducted for cost operating the villa? Would there be any challenges when such a villa is sold later?

[Anonymous]

Hi asola,
I’m in the same boat as you are. I am a Spanish national expat (left in ’96) living in the US. Apparently I have been gone too long and things have changed a bit.
I own a couple of LLCs in the US that I use for renting out properties here and in Central America. This is very straight forward here and accounting, services and everything you need is made available easily on the internet or via property management companies (at around 6-8% of property renatl income). I wanted to do the same thing in Spain now that the dollar is regaining some lost ground agains the Euro and properties are becoming price attractive in Spain. I wanted to buy and operate (rent) something in the Costa Brava or the Balears.
I’ve been told that a US LLC or corporation cannot operate directly in Spain, I’d have to nominate a ‘sucursal’ kind of a branch without legal entity (but treated as one for tax purposes) or else form a Sociedad Limitada on the name of one of the LLCs I am member of and wholly owned by it. In both cases I have got to nominate an ‘agent’ in Spain that will be allowed to operate this company (file taxes, open bank accounts, etc). This is the first time I’ve learnt about this agent figure. I studied business admin., economics and taxation (in Spain back in the 80s) and there was nothing like that ‘back then’.
Apparently I’ve also learnt that the S.L. or the ‘sucursal’ can not deduct operating expenses and have to declare (and get taxed) for all rental income received from tenants. What kind of business is that?! What about the cost of doing business? Can someone add some light here? There are a zillion properties in Spain owned by expats, there must be someone that owns it via a British or European Ltd. corporation I guess. Does anyone here know what is the process for buying the property using an S.L.? Can British people operate directly via Ltd. corp. stablished in the UK? or do you also need a ‘sucursal’ or an S.L.? How does the accounting/taxation for these S.L.s work, both locally and how do you report revenue/costs to Inland Revenue (or IRS if you know)?
Gracias.

[Anonymous]

According to me before buying any property you should investigate about company from whom you are buying the property and also concern other companies also so that you can buy a good deal…It hardly matters if this work take some time but the output will be good.
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[Anonymous]

“Apparently I’ve also learnt that the S.L. or the ‘sucursal’ can not deduct operating expenses and have to declare (and get taxed) for all rental income received from tenants. What kind of business is that?”

This is kind of rules & regulations Spain has. No wonder there is little or no enterprise culture in Spain and all & sundry wants to become a civil servent.

[Anonymous]

Forgive my lateness in jumping in here.

One way of doing this is to set up a Spanish SL which buys the property. The SL is owned by a UK Ltd company (or the equivalent wherever you happen to want it to be such as Norway for eg). Then when the time comes to sell, if it ever does, you have a choice between selling the proerty, selling the SL or selling the Ltd Co, whichever is most tax efficient at the time.

Disadvantage: running costs – so may only be worth the hassle with substantial sums or where your management of the property may lead to significant capital gains perhaps because you are building a business based on the property or developing land or reinstating ruins etc.

[Author]

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