transfer of property ownership from company to individual

a number of years ago we bought a property using a spanish company. we are thinking about transferring it into personal ownership, however i am concerned about three things:

I) would we have to increase the capital prior to disssolution to avoid the 7% transfer tax being applied by Tax office ? (for example, would they see our dissolution as simply an exchange of the property for the "loan" that is currently on the books)?

ii) what would one expect to pay in terms of liquidation costs (eg. notary fees, land registry fees, professional fees?)

iii) are there any taxes due for liquidating a company?

many thanks
james
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VICTORIAS SECRET GIFT CARD

Hello James,

If you dissolve the company owning the property the transaction will be subject to 1% stamp duty (in Spanish, Actos Juridicos Documentados-AJD- en su modalidad de Operaciones Societarias-OS).

However, the Tax Athorities are applying the principle of proportionality so that if the adjudication of assets to shareholders does not keep a proportion with the shareholding they would be entitled to consider that a transfer of property has in effect ocurred (rather than an adjudication) and therefore tax at 7%. (And also, logically, it is not possible to adjudicate assets to people who are not shareholders as this will be a proper sale).

With respect to taxes you should budget for 1% of the declared value of the assets adjudicated, between 500 and 1000 Euros in Notary fees (depending on the value) and a similar amount in Companies House fees and Land registry fees. Legal fees applicable in this case will vary depending on the values involved.

With respect to the company liquidation the above tax is applicable (only once).

You will be required to produce the following:

- Original company deeds
- AGM approving the dissolution and liquidation of the company, which will need to include a final balance sheet, a report on the activities carried out and a proposal for the division of assets and further adjudication.

With the above documents the shareholders(s) and administrator(s) will have to sign the required deed at the notary and further register the liquidation and the property in their respective registries.

Should you require our help in this matter please advise.

Kind regards

Thanks for the response. a few points of clarification

i) is the company likely to be subject to the 1% stamp duty and the 7% tax or is it 1% stamp duty and the 1% tax that you mention below; or is the 1% tax noted below in addition to the 7%?

ii) is there a way of getting around the 7% transfer tax?

iii) what is the definition of the "declared value of the adjudicated assets". is this the value on the balance sheet of the property (the only asset)? can we make a case that the value of the property has declined significantly since we purchased it?

iv) if we need to recapitalise the company for accounting purposes, are there any taxes associated with this?

v) are we obliged to use our existing gestor (who also maintains our registered office and prepares accounts)? or can we use another gestor who might be significantly cheaper?

v) basically, we are looking for the simplest and cheapest way to transfer the asset from the company to ourselves as two joint owners.

many thanks
james

Hi James,

In response to your queries:

i) The tax is 1% stamp duty, there is no 7% tax.
ii) As above, not transfer tax is applicable unless shareholders are adjudicated what they are not entitled to according to the share spread.
iii) The value to be used will have to be the fiscal value, normally being the catastral value times a coeficient applied by each town hall (4.1 for Marbella). If you put a lesser amount they will almost certainly send you a supplementary tax demand, which can challenged (2 year process)
iv) Recapitalising is equally tax at 1% Stamp Duty.
v) You are not obliged to use anyone in particular, any qualified professional (preferably lawyer or economist) is able to deal with this.
vi) Dissolving the company is the quickest and cheapest way to transfer the property back to you.

Would we have to increase the share capital of the company prior to dissolution to avoid the risk of the 7% transfer tax being applied? Would it be likely that the tax office would see the dissolution as an exchange of the property for the "loan" that is on the books.

if this is the case, presumably there would be costs associted with increasing the share capital?

regards
james
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BUY SILVERSURFER VAPORIZER