Using a Spanish company to sublet properties

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    • #238831

      I am EU citizen, resident in UK.
      I own, on my name a number of residential (non touristic) flats in Spain that I rent. Before Brexit, when UK was part of EU, I used to pay 19% of tax on rental income (rent-expenses), but now I am liable of 24% and what is the real issue, not on profit, but on the whole rental income without possibility of deducting any expense.
      I was thinking of creating a resident Spanish company (I can because I am Italian citizen), that would let from me the properties, with the faulty of subletting them but also commit to pay any expenses for such properties (reparations, maintenance, community expenses).

      – rent at a fair price property from me, let’s call this A
      – sublet such property , let’s call this B
      – pay expenses (community expenses, reparations, professional fees for real estate agencies ofr letting them out), let’s call this C

      In this way, I should have a structure for which
      – Company pays 25% on what is their operative income B – A – C
      – I, as individual, will pay 24% tax on A

      Obviously I will have to pay also tax on any dividend I draw from the company, but on the country where I am resident (at the moment UK)

      Does this seems a legitimate setup, do you see any problem with the setup?

    • #238857

      I might be wrong, but you may have to pay tax on the dividend in Spain (19% withholding tax) then use the double taxation treaty with the UK so you don’t pay twice. Not sure if the treat is affected with Brexit. I doubt it.

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