Buying in your own name, or through a company

What is usually promised

The pitch is some combination of four things: lower tax on the rental income, protection from inheritance tax, limited liability, and privacy. Each has a grain of truth and each behaves differently in practice from the way it is described across a table at a sales office.

What actually changes

	In your own name	Through a company
Tax on rental income	Non-resident income tax: 19 % on the net for EU, Iceland, Norway and Liechtenstein residents, 24 % on the gross for everyone else	Depends on whether the activity creates a permanent establishment in Spain, on where the company is resident, and on the treaty. It is not automatically lower
Tax on the days it is empty	Imputed income on the rateable value, no costs deductible	Its own rules, and for entities resident in non-cooperative jurisdictions a special annual levy on the value of Spanish property
Running cost	A return per property and per owner, once a year	Accounts, corporate filings, a registered office, and an adviser in at least two countries
Using it yourself	Reduces the days let, increases imputed income, nothing else	The company is letting to its own shareholder. That has to be priced at market value and reported, in Spain and probably at home
Selling	One capital gains return, and the buyer withholds 3 %	Sell the property, or sell the shares. Each has different consequences, and Spanish rules can tax the transfer of shares in entities whose assets are mainly Spanish real estate
Inheritance	Spanish succession tax on the property, with regional reliefs that can be substantial	Shares rather than a property, which moves the question but does not necessarily remove it

The costs that are never in the first spreadsheet

• Two sets of advisers. The company is resident somewhere, and that somewhere has its own filings. You are now paying for compliance in two jurisdictions for one house.
• The special levy. Entities resident in non-cooperative jurisdictions pay an annual charge on the value of their Spanish property. Structures set up years ago through certain jurisdictions have been quietly generating this ever since.
• Unwinding. Taking a property out of a company later is a transaction with tax consequences. The structure is much easier to enter than to leave, and the exit is rarely priced at the start.
• Financing. Spanish lenders treat corporate borrowers differently from individuals, and the terms are not usually better.

When it is genuinely the right answer

• Several unrelated investors putting money into the same property, who need a way of holding, transferring and eventually exiting a share of it.
• A genuine business, not a family holiday home: multiple units, staff, an actual trade being carried on, where the company reflects reality rather than dressing it up.
• A group with existing structures where the Spanish asset is a small part of something already built and already advised on.
• Succession planning that has actually been modelled across both countries, by people who can see both sides. Not asserted — modelled.

The privacy argument, examined

Holding through a company is sometimes sold on confidentiality. It is worth being clear about what that means today. Beneficial ownership information is collected and shared between authorities, banks identify the individuals behind an account before opening it, and cross-border exchange of financial and property data is routine. A structure may keep a name off a land registry extract that a neighbour could read; it does not keep it from any tax authority that asks. Buying a structure for privacy, and then paying for it annually for twenty years, is paying a great deal for a distinction that is narrower than it sounds.

What tips the balance on your Spanish property

Whether the property is a business or a home you also let. A property used personally for part of the year is, in our experience, almost always simpler and cheaper held directly: the tax on the letting is straightforward, the tax on the empty days is a modest imputed figure, and the personal use costs nothing extra at all. The corporate route only earns its running cost where there is genuine commercial substance, several parties or an existing group.

The second factor is the exit. Ask, before signing anything, what it costs to take the property out of the structure in ten years. If the person selling the structure cannot answer that clearly, that is the answer.

If you already have one

Then the decision has been made and the useful work is different: making sure the Spanish filings are correct, that the special levy question has been checked, that personal use is being handled properly rather than ignored, and that unwinding is modelled before it becomes urgent. Inherited structures can be perfectly manageable. What causes damage is a structure nobody is filing for.

We are happy to run a structure we would not have recommended, provided it is declared properly. What we will not do is tell you in the abstract that it should be dismantled: that depends on numbers, on both countries and on your plans. The Spanish side of the picture is on non-resident property tax, the sale is in selling as a non-resident, and the rate question is in inside or outside the EU. Tell us what you hold through the contact form.

A house in Marbella, a couple from Munich and a sales office's advice

Klaus and Sabine live in Munich and are about to buy a house in Marbella for 600,000 €. They will spend about eight weeks a year there and let it to tourists for the rest, roughly 140 nights at 250 €. The estate agency has recommended buying through a company: «you will pay less tax, protect the inheritance and nobody will know it is yours». Completion is two months away.

Entry costs almost the same whichever route they take. A resale purchase in Andalusia pays 7 % transfer tax (Impuesto sobre Transmisiones Patrimoniales) whether the buyer is a person or a company: 42,000 € on 600,000 €. Notary and registry are similar. The difference lies in everything that follows. Shared assumptions: 35,000 € of rental income; 15,000 € of annual costs (community, IBI, insurance, utilities, cleaning, commissions); a revised rateable value of 300,000 €, half of it taken to be the building.

In their own names, 50/50

As residents of Germany they pay 19 % on the net, with costs apportioned to the let days: 15,000 × 140 / 365 = 5,753 €. Base 35,000 − 5,753 = 29,247 €, split between them; total tax 5,557 €. Imputed income for the 225 days not let, their eight weeks included: 300,000 × 1.1 % × 225 / 365 = 2,034.25 €, and 386.51 € of tax. Total in Spain: 5,943 €. Their weeks in the house cost them nothing beyond that imputed income.

Through a Spanish company

The company collects the 35,000 € from guests. But a company that lets its house to its own members must price that use at market value: at 1,750 € a week, eight weeks add 14,000 € of income, paid by the members or treated as remuneration in kind. The company deducts its 15,000 € of costs, depreciation (2 % of the 150,000 € attributable to the building, 3,000 €) and about 3,000 € of running costs. Profit: 49,000 − 21,000 = 28,000 €; at the general 25 %, 7,000 €. A company holding a single property with no genuine business activity is usually a holding entity and does not reach the reduced rates. And the profit is still inside: taking it out as a dividend brings a second layer, taxed in Spain on a non-resident and in Germany too, with the treaty sharing it out.

Marbella house	Own names	Spanish company	Foreign company
Purchase tax	7 % transfer tax: 42,000 €	7 % transfer tax: 42,000 €	7 % transfer tax: 42,000 €
Annual Spanish tax	5,943 € non-resident income tax	7,000 € corporate tax, before any distribution	Non-resident tax as an entity, plus whatever its own country levies
Upkeep	Non-resident returns	About 3,000 € a year	Advisers in two countries
Eight weeks of family use	Only imputed income	Market rent or benefit in kind	The same, and probably at home too
Getting the money out	It is already theirs	Dividend: a second tax	Depends on its country and the treaty
Selling	19 % on the gain; buyer withholds 3 %	25 % in the company, then a dividend, or a sale of shares with its own rules	Special rules for companies whose assets are mainly Spanish property
Inheritance	Spanish succession tax on the house, with regional reductions	Succession tax on the shares, also Spanish assets	Depends on the country; the Spanish question remains

With a house used by the family and let, the Spanish company pays a little more every year, requires accounts, turns the owners' holidays into a tax issue and traps the money behind a second layer. There is no year in which it comes out ahead. With other facts — many properties, no personal use, a reinvestment plan — the comparison could change, so we do not present the conclusion as universal.

The annual 3 % that older structures sometimes carry

A company resident in a jurisdiction classed as non-cooperative also pays, every year, a special charge of 3 % of the rateable value of its Spanish property: on this house, 9,000 € a year. Some structures set up years ago generate it without anyone having noticed. Before completion, what helps most is simpler: get the NIE, as explained in the NIE to buy in Spain, decide each spouse's share, and keep from day one the invoices that will reduce the gain when you sell.