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I am a shareholder in a UK registered company (Ltd) that was set up to 25 years ago to buy and run an apartment in Spain for the benefit of its 12 shareholders. We do not rent it out and it does not make profits. Everything has been OK with this arrangement until the last few years but now I believe we need to be Spanish registered too. Is this correct and if so, how do we about this?
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Dear Bernie,
Thank you for your Post about a UK Limited Company to own Spanish property.
I am the Managing Director of a UK & Spain Legal, Taxation & Accounting practice specialising in helping all Nationality clients purchase and own Spanish property all over Spain within UK Limited Company structures since 1994.
I am experienced to comment as I oversee my organisation that manage over 500 client UK Limited Companies that own about 600 Spanish properties between them.
A UK Company that owns Spanish property has Shareholders and Directors who own a manage the Company and the Spanish assets it owns.
The UK Company has a UK registered office, Company Secretary and UK accountant to produce the UK annual accounts.
The UK Company has a CIF number from the Spanish Tax office so it can own Spanish property and operate in Spain.
To apply to the Spanish Tax office for a CIF number the UK Company must have a Spanish Fiscal Representative which is an approved Spanish Lawyer or Spanish Accountant that deals with the Spanish Tax office on behalf of the UK Company.
In the majority of cases there is no Tax paid by the UK Company to the Spain Tax office if the Tax status of the UK Company is set-up correctly and deals with the Spain Tax office submissions with accurate legislation.
Spain has three classes of Company it operates in Spain.
1: Spanish Tax Resident Companies like a Spanish SL Company.
2: Offshore Companies like Gibraltar, Isle of Man, Monaco and BVI Companies that Spain Taxes each year 3% on the value of Spanish property it owns.
3: A UK Limited Company is classed as a non Resident Company of Spain and does not pay annual 3% or Wealth Taxes in Spain on Spanish property the UK Company own.
I hope the above information is useful and please let me know of anything further I can help with ?
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Thank you very much for your comprehensive reply. Although we did go through a lawyer in Spain when we initially purchased the property, we have not had any dealings since. The person who dealt with the purchase from our side is no longer involved and we cannot find any info in our files regarding a CIF.
I guess the easiest thing to do is to start from scratch and apply for a CIF via a lawyer. Can you recommend any in Arroyo De La Miel or Benalmadena?
Is it likely to cause us problems having not been registered previously?Kind Regards
Bernie Allan
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Dear Leth,
You can also own Spanish property within Companies from Denmark as Spain has a treaty with Denmark and also Spain does not class Denmark as offshore.
Companies from Denmark are classed as Group 3 below and can own Spanish property with the same Tax exemptions and benefits as a UK Company.
1: Spanish Tax Resident Companies like a Spanish SL Company.
2: Offshore Companies like Gibraltar, Isle of Man, Monaco and BVI Companies that Spain Taxes each year 3% on the value of Spanish property it owns.
3: A UK Limited Company is classed as a non Resident Company of Spain and does not pay annual 3% or Wealth Taxes in Spain on Spanish property the UK Company own.
I hope this helps?
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Hello Roger,
The Channel Islands like Jersey and Guernsey are classed as Group 2 from the list above.
You can own Spanish property in these off shore companies but each year Spain charges the off shore company 3% a year on the value of the Spanish asset it owns. This is why you should not own Spanish property in off shore companies.
You can buy your Spanish property direct into a Group 3 ownership or if you already own the Spain property in an off shore company then you can invest it from the off shore Company into a UK Company, and not have the 7-10% Spain property Transfer Tax.
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Hi Roger,
As I mentioned above Spain has 3 classes of Company that can operate in Spain and even when the UK leaves the EU then Spain will not class the UK as a Paradise or Tax Heaven country, so the Offshore Tax will not be due of 3%.
The UK has treaties with Spain that have been in place well before the EU Treaties so after the UK has left the EU Spain will class the UK like, Australia, China, Argentina to name a few that are all Group 3.
These Countries are not even in Europe and are not classed as Offshore but can own Spanish property with Group 3 Tax exemptions of the annual 3% offshore property tax.
If you own a Spanish property within a Spanish SL Company then Spanish Inheritance Tax is not protected against as the SL Company is still subject to Spanish Inheritance Tax as it is a Resident Company of Spain.
Also if you buy and sell Spanish property within a SL Company then the 8-10% Spain Property purchase tax has to be paid.
If you buy Spanish Re-Sale property into a UK Company then the 8-10% Spain Property purchase tax can be saved.
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As mentioned above ‘3: A UK Limited Company is classed as a non Resident Company of Spain and does not pay annual 3% or Wealth Taxes in Spain on Spanish property the UK Company own’, would this also apply to a company owned in Malta. I currently own a property in Spain and also have an offshore company in the Isle of Man and also a Ltd company in Malta and am looking to avoid unnecessary taxation if I am able to transfer this into a Ltd company. Thanks.
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