Can I buy a property in Spain through a UK limited company?

Every now and then we are asked by potential clients, “can I buy a property in Spain through a UK limited company?”

The main reason behind this question is usually their personal tax situation in the UK. Oftentimes those clients prefer to buy the property in Spain through their UK company rather than paying themselves the necessary dividends to buy the property in their personal names.

The first step is therefore to value the advantages and disadvantages of buying a Spanish property through a UK limited company. The buyer should get some tax advice in the UK as to whether this ownership option will be tax efficient in the UK or not. If it is, then the next step is to compare the costs of buying the Spanish property through their names against the costs of buying through a company.

In general terms, it is more expensive to buy a property through a company as it requires more paperwork and more red tape. One of the main reasons is that the corporate documentation needs to be translated into Spanish and then legalised with the apostille of the Hague Convention. Furthermore, the company and its director will require to obtain a Spanish tax number (NIF in the case of the company and NIE in the case of the director). This has an impact on the legal costs of the purchase that the buyer needs to value.  

When it comes to the Spanish Notary, the Land Registrar and the Tax office it does not matter much whether the property is bought by a UK company or a UK domiciled individual. The costs and the taxes involved are still the same. However, it is the Spanish banks who usually cause more problems.

Opening a Spanish bank account for a UK company requires more paperwork than for an individual. Spanish banks’ strict compliance processes can be very demanding when the bank account is for a foreign company, and they do not always make it easy for the customer. However, a lawyer versed in this type of matter will know what documentation is required and will be able to guide the client through the whole process.

Once the Spanish tax numbers have been obtained and the bank account opened, the process is then quite straightforward. In fact, the process is more or less the same as if the property was purchased by an individual. A deed of sale and purchase will need to be signed in the presence of a Notary Public in Spain on completion by either the company director or by the lawyer who has been provided with power of attorney from the company to represent it in Spain. The transfer tax will also be the same as the tax is charged on the purchase of the property and not on the legal structure of the buyer.

Once the property is registered in the company´s name, it will be necessary to file a non-resident income tax in Spain on an annual basis. This can be easily done by a Spanish accountant, usually known as gestor, or by a lawyer. If the property is not let, the said tax will still be due, being the tax calculated on the basis of the property´s tax value. This would also apply if the property was purchased by a non-resident individual.

In a nutshell, it is possible to buy a property in Spain though a UK limited company. The process is very similar but involves slightly higher costs as certain corporate documentation needs to be translated and legalised. In addition, a tax number needs to be obtained but it should not be an impediment to this method of purchase, especially if buying through a UK company is tax advantageous for the client back in the UK.

As always, getting the right team of advisors, in this case tax advisors and lawyers, can make a big difference and reduce complications.

For more information, you can contact our Spanish Desk here.