Buying through a uk based company.

[PBEN]

We have a reservation on a property in Spain and are considering buying through my uk company. In the future we may rent the property bu not initially. The turnover in Spain will, therefore be zero. In that case I am trying to find out what company tax will be due in Spain. In UK the accounts are lodged with Companies House and corporation tax paid. Does there need to be a separate set of accounts for Spain and lodged somehere? Presumably I would not pay corporation tax twice.

[Patricia]

Hello PBEN:

I believe you are confusing the Corporate Tax and the taxes due for rental income.

As the property is located in Spain, the Corporate Tax must be paid in Spain every year, and in the event that you rent out the property, also the rental income tax. This would be subject to whatever is stipulated in the Double taxation treaty between Spain and the UK.

Regards,

[Patricia]

Hello PBEN,

As you presume, you will not pay tax twice, in accordance to the Double taxation Treaty (http://http://www.hmrc.gov.uk/manuals/dtmanual/dt17550+.htm).

If you decide to rent it out in the future, you will be required to file the 24.75 % of the net rent obtained every quarter. In the event that you are renting the property to a company instead of a physical person, you would be requested to register for VAT and retain the 24.75 % each month. You will be able to offset all the expenses related to the rented property, such as the local tax ( IBI ), Community fees and repairs.

The company will also have to declare the generated income and the tax paid in Spain by the Ltd. company before the UK Tax authorities, considering there is Double Taxation Treaty between both countries that I mentioned before.

Please feel free to contact me on the details below if you need more information.

Regards,