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Spanish Law Tribune

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Archive for July, 2011

Spanish Express Company Formation Now Available

July 14th, 2011

The so called Spanish Express Companies have finally arrived. You are now able to incorporate a company from scratch and operate with it within four days from the moment you decide on what you will be naming it.

The new regulations approved on the Royal Decree 13/2010 (http://noticias NULL.juridicas NULL.html) which was passed last December has finally been implemented, and Notaries and Mercantile Registry officers have started to work in a whole new way. It was just last week that we, at Lawbird, incorporated the first express company, ready to be used and fully operative on the following day to the signing at the Notary office.

These companies bring an important reduction on the overall incorporation costs as notary and Mercantile Registry fees are reduced. This price drop follows the Stamp Duty exemption for limited liability companies in force since the passing of the mentioned law.

Incorporation Process

The process is summarized as follows:

  1. The company name is applied for and the certificate issued by the Central Mercantile Registry is obtained within in 24-48 hours.
  2. Soon-to-be Company shareholders and administrators meet at the Notary office (or their legal representatives if there is a Power of Attorney allowing them to sign in their behalf )
  3. Deeds are signed before the Notary, and the  tax ID code (CIF/NIF) is obtained immediately after. At this point the company is ready for basic operation.
  4. The notary itself submits the company deeds for registration at the Mercantil Registry, process which will take maximum seven working hours.
  5. Once you get the deeds back from the Mercantile Registry, the company is fully operational.


It looks as a very simple process, and it certainly is. However, there are some limitations, as not all activities can take advantage of this new regulation. There is a list of specific company activities which these express companies can carry out, which is the following:

  1. Construction, Installations and Maintenance
  2. Wholesale and retail. Commercial Distribution. Import and Export.
  3. Real Estate Activities
  4. Professional Services (Law firms, Architect studios, etc.)
  5. Textiles and Manufacturing Industries
  6. Tourism, Catering, Restaurants and Hotel Industry
  7. Service Providers: Administration and Management Activities. Educational, Health care, leisure and entertainment services.
  8. Transport and Storage
  9. Information and Communications Bureau (Press)
  10. Agriculture, Stock breeding and Fishing
  11. Information Technology, Telecommunications and Office Automation
  12. Alternative Energies
  13. Buying and selling (dealers) and repair. Repairs and maintenance of machinery and installation.
  14. Investigation, Development and Innovation.
  15. Scientific and Technical Activities.


Corporate Law ,

Buying Property in Spain: In my Own Name or Using a Company?

July 7th, 2011

Buying a property in a company name is, in many respects, a good proposition, unless you ask certain lawyers who will tell you that it is always beneficial (for them, that is, from a financial perspective). Logically, giving incorrect, wrong or biased advice is never the desired option if you want to stay in business for the foreseeable future and therefore, in our case, we tend to use the following tax and legal points, or parameters, so that a client can make a judged decision.

Buying Property in Spain: In My Own Name?

Most property transactions in Spain have physical persons as buyers, for the reason that mortgage lenders are not keen to lend to property-holding companies and when they do, loan-to-value ratios rarely exceed 50%.


  1. Less upfront cost (no company incorporation cost).
  2. No associated company running costs.
  3. Improved ability to obtain finance.
  4. Lower Capital Gains Tax (average of 19% on net profit).


  1. For non-residents, Personal Income Tax (PIT) is applicable to the property: this annual tax is calculated by applying the tax rate (24%) on the base rate (between 1.1% and 2% of the rateable value or 50% of the purchase price, if the former value has not been approved).
  2. Visibility: The Spanish land registry system is accessible by anyone who registers with them, via internet, or without registering, by applying directly in their offices. This may not be in the interest of people who wish to remain anonymous for any reason (defaulting on contractual obligations abroad, matrimonial disputes etc.).
  3. Reduced ability to request a VAT refund, as the Tax Office will view a non-resident self-employed foreigner (registration as such will be required) as a less likely candidate for a refund, given the historical records of unfounded VAT claims on holiday property and a financially strained Tax office.
  4. Only certain costs and improvements on property can be deducted against the profit on selling, not annual running costs (unless one registers as a trader).

Buying Property in Spain: In the Name of a Company?

The pros and cons of incorporating a Spanish company to purchase a property are summarized below:


  1. No annual taxes on corporate tax after a recent tax law change. Company running cost will depend on the firm dealing with the bookkeeping, €120 per month being an acceptable fee.
  2. Ability to deduct property running costs from profits.
  3. Anonymity: A company will allow the shareholder and ultimate owner to limit the exposure to any third party ownership information request. For a full-proof anonymity situation, buying shares of an off-the shelf company and not being appointed as the director is essential (only a Judge, or the Tax Office, could request the shareholders books to be made visible).
  4. Improved ability to register as an actively trading to request a full or partial VAT refund.


  1. Set up costs: Law firms will generally charge anything between €1,000 and €3,000.
  2. Maintenance costs, compared with paying personal non-residents income tax, where the property has a rateable value of €300,000 or less.
  3. Capital Gains Tax: Corporation tax is currently at 20% for net profits of less than €300,000 per annum, and 30% thereafter. A retention on dividends payment is thereafter applicable, at 15%. Non-payment of this tax goes largely undetected.

Generally, it is established that buying a property in a company name is recommendable, in our professional opinion, where:

  1. There is no financing requirement to acquire the property.
  2. There is a need or desire for anonymity.
  3. The property has a rateable value of €300,000 or more, as non-residents PIT will be approximately €1,500 per annum, as opposed to a company running cost of around the same value (irrespective of the value of the property).
  4. The purchase of the property attracts input VAT (new property sale), which is susceptible of being offset against output VAT, where the company embarks on a genuine activity, i.e. property is rented to another company (private individuals do not pay VAT on rental) or used for any other commercial activity, or in the event that the property is refurbished and then sold on.

And what about companies Gibraltar and other offshore jurisdictions?

I have already dealt with this on a previous post, from a rather negative point of view, even if it may have certain benefits.