Malcolm Roach M.I.C.M

Director (UK)

Wincham Consultants Limited

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By Malcolm Roach M.I.C.M - Wed 11th Jul 2012

 

Tumbit Approved Partner

Many of our clients tell us that they have been advised by other professionals that Spanish Taxation is likely to decrease in coming years and that Inheritance Tax (IHT) should not be an issue.

However, this may not be the case, with the on-going financial crisis still affecting the Spanish economy where there has been a certain amount of pressure placed upon autonomous regions to try to combat the lack of funds by raising Taxes. The Andalucian Region has increased Taxes including those on resale property purchases, and other regions of Spain such as The Balearic Islands and Asturias have followed suit.

Spanish Resale Property Transfer / Purchase Tax Prior to 2012 in Andalucía if you were purchasing a resale property you had to pay a 7% Tax on the purchase price. As of the 1st January 2012, the Tax on the purchase of resale properties up to 400.000 euro has risen to 8%, on the amount above 400.000 euro you have to now pay 9% and if you are buying for over 700.000 euro then the Tax on that amount rises to 10%. In essence Taxes on resale purchases have not decreased, but have in fact increased overall.

As we have previously written, over the past 12 months alone in Spain both residents and non-residents have experienced the following increases :

* Capital Gains Tax (CGT) Increased

How can we help ?

An effective solution to the IHT problem in Spain is to purchase the property into a UK Private Limited company which the purchaser's would own as Shareholders. Contrary to popular belief there may be no property Purchase Tax payable on this transaction, unlike other property transactions in Spain.

A UK company is not an offshore company as is a company of Gibraltar or the Isle of Man, which would be charged an annual Tax by Spain of 3%.

Once the property has been invested into a UK Limited Company there are 2 options available should you wish to sell the property in the future. The property can be sold independently by the Company, or the shares in the Company can be sold to the purchaser which may save the Purchase Tax for the buyer and 3% Withholding Tax to the seller.

It is always necessary to consider every case on an individual basis and our trained Consultants can advise on the best structure to adopt for your own circumstances of Spanish property ownership.

Please click on the banner below to obtain your 'free of charge' Spanish Inheritance Tax illustration demonstrating your potential Tax liability and the savings you could make by not purchasing in your own name but a UK Limited Company structure.