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Increase in Transfer Tax on Resale Property Purchases

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

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

* Wealth Tax Reintroduced

* Non Resident Income Tax Increased.

* Spanish Resident Income Tax 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.

Comment on this Blog



It makes no difference if the Spanish property is owned by a Spanish SL Company, Offshore Company or an individual name. We can move the property ownership by investment into a UK Limited Company and all the tax advantages still apply to the UK Company ownership.

Mark Roach, Wincham Consultants Ltd - Wed, 17th Oct 2012
If a house in Spain is owned by a S.L. company which in turn is owned by an off shore company would investing the property in a UK Limited Company be the solution to IHT or taxes in the event of a sale?
John Powell - Tue, 16th Oct 2012

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