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Avoiding Spanish Inheritance Taxes

By Mark Roach - Wed 7th Apr 2010

Detailed below is the procedure concerning the transfer of a property in Spain from a person, to a UK company :


Proposition - To save Death Duties & Legal Fees in Spain and make the property easier to deal with by the Executors of the Clients Estate in the UK, and to retain the maximum value of the property for the beneficiaries.

Requirement - To establish a UK Registered Company owned by the Client for the purpose of owning the clients property in Spain. The client’s share holding to be lodged with and noted in the clients Will in the UK. The property to be legally transferred from the Client to the Company.

Method :

1.) A UK Private Limited Company is to be formed by our UK Subsidiary, Companies 4 U Limited (C4U).

2.) C4U will provide the ongoing service of Registered Office and Company Secretary in the UK to include the annual filing fee at Companies House.

3.) A UK Notary will provide a translated copy of the Articles of Association and a Certificate of good standing, notarised and apostil.

4.) A Spanish Abogado will apply to the tax office for a CIF no for the Company, he will provide the transfer documents and attend the Spanish Notary to effect the transfer, and he will deal with the registration of the property in the company name.

5.) Power of Attorney costs and Plus Valia Tax will be payable if applicable.

6.) The Gestor will deal with the tax forms in Spain for the Company in the future at a small cost.


1.) The Company can be dealt with in the UK by a UK Lawyer, the Company Shares and Shareholders loan accounts can be dealt with in the Owners Will and Estate. There is no need to involve lawyers in Spain, or the Spanish Property.

2.) The beneficiaries can become involved in the company prior to the demise of the Owner This enables easy continuity of the management of the Company and the management of the property, most certainly if the owner has become ill or incapacitated.

3.) Should one of the owners die there is no need to deal with the person’s estate in Spain. It can take years to transfer a partners ownership to the surviving partner, as well as the payment of death duties and taxes in Spain.

4.) The Company being the owner of the property means that no action is required in Spain and no Will is required in Spain for dealing with the property.

5.) The Owner/Director of the Company may be entitled to claim expenses for things like flights and car hire .The company can also claim relief on overheads i.e.. Insurance, Community fees, Electric, Water and Council Taxes. These can be financed by loans to the company by the shareholder, increasing the shareholders loan to the Company. This loan can be withdrawn later if the asset is sold and may be tax free.

6.) Finance can be arranged with a lender jointly between the Owners and the Company to assist with the purchase. The repayments can be financed by shareholders loans that may be available to draw in the future tax free.

7.) Should the Owner wish to involve their family members or beneficiaries in the Company this is easily done, with the Owner keeping control of the Company and the property, it makes it easy to manage different levels of this ownership.

8.) The property being owned by the Company means that there is no need to involve Lawyers in Spain when it is the time to deal with the Owners Estate or to pay the onerous complicated death duties in Spain.

It will also save the costs of the UK Lawyer in the time required to instruct the Spanish Lawyer to deal with the matters in Spain.

The cost of dealing with the transfer of property in Spain can sometimes be 10% of the value of the property and if a sale is required then a further 5% Agents fees would be charged.

In the UK the only thing that needs to happen is to transfer the Shares and Loans to the Beneficiaries.

It may be that the shares in a UK private company may not form part of the estate for death duties.

The loan accounts would form part of the Estate for death duties but these could be transferred to the beneficiaries over a number of years as the tax system allows.

UK Lawyers fees and Inheritance tax can take as much as 50% of the value of the property. This, added to the costs in Spain, make it sensible to protect the property in a UK Company

9.) The increase in value of the property is to the advantage of the Company and not directly for the beneficiary therefore a saving on death duties may be made.

10.) In the last UK Budget the Chancellor removed the benefit in kind Tax on Owners or Directors staying in their company owned property this takes effect from April 2008.

Once they have this structure in place, the property ownership is transferred to a UK company. If they want to sell it they can, rental income doesn’t change, except visits to Spain, hire cars and all kinds of bills become tax deductible.

Interested in finding out how we can help to protect your property in Spain from IHT ? - Simply click the link above to visit our own page.


Comment on this Blog

Dear George, Thank you for your requirement and if you please visit the Wincham Spanish Tax planning website via the Wincham links above & below you can supply your details via our website and apply for your quotation for this process and your Spanish Inheritance Tax liabilities if you keep the property in your own name.
Mark Roach - Wincham Consultants Ltd - Mon, 22nd Oct 2012
Thinking of putting my spanish apartment into an uk company for tax purposes.
George Forsyth - Mon, 22nd Oct 2012
Option 1 : is you sell your property out of the Company and the buyer will pay the 7% Transfer Tax and your Company will pay the 3% Withholding Tax in Spain no different than selling the property from an individuals name. Option 2 : is that as any Nationality in the world can own a UK Company and be a Director so it is an advantage to purchase the UK Company which will save the 3% Withholding Tax in Spain to you and also the 7% Transfer Tax to the buyer and they only pay 0.5% UK Stamp Duty on the purchase of shares value.
Mark Roach - Wincham Consultants Ltd - Sun, 25th Sep 2011
Can you explain what happens if we wanted to relocate and sell the property?
Derek Sharples - Fri, 23rd Sep 2011
Our office in Spain helps you open a Spanish bank account in the Company name and we help you move all utility bills and payments into that account. Any income collected into the Company can then be offset against any expenses directly related to the property and UK Corporation Tax of 21% is only charged on any profit left which in the majority of cases should be less than doing this in your own name.
Mark Roach - Wincham Consultants Ltd - Tue, 13th Apr 2010
Would it be a requirement for me to then change all the utility bills ( Municipal taxes, water, electricity etc...) into the new company name aswell, or can I still have them tax deductable if I kept them registered to myself, personally ?
Paul Beachill - Tue, 13th Apr 2010

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