My colleague Emma Yates from LexisNexis is organizing a conference on Tax Planning for European Property investment on the 20th and 21st May in central London. Please find attached information and contact Emma if you have further queries.
Last 9th of March, the Spanish general elections gave Prime Minister Zapatero a great opportunity to show what he can do for the Spanish Real Estate market. Can the property market be influenced by a wise tax policy? I believe so.
During Zapatero's campaign there was a commitment to abolish some taxes, i.e. wealth and Inheritance which may have historically prevented people to relocate to Spain. There were often press releases regarding tax breaks and incentives for the developers, buy to let allowances, etc...
The government will be formed in April and we shall see the legal instruments to implement the tax changes, which we will continue monitoring.
In Costa del Sol during the last decades we have seen the rise of the residential property market and the influx of hundreds of thousand British and Irish property buyers. Originally many people came to retire to this part of the world, a trend that is still true today. During the last decade, however, a large wave of investors came, fueled by a buoyant market at home, specially in the UK and Ireland. The off-plan investment opportunities were promoted by 3-4 large real estate companies, which made very popular to invest in Spain.
Now, in 2008, the market is very different. It would be fair to say that the international demand is still high for residential properties in Costa del Sol, as well as a large offer of such properties, with may have been temperated by a bear sentimento in the international investment market.
Continue Reading...In the Anglo Spanish tax and legal world, the position of Gibraltar, both for proximity and for the uniqueness of its legal and tax regime is fascinating. A very good place to get some professional information about Gibraltar is the Grant Thornton site.
From the years of the Utrecht Treaty in the 18th Century, times have changed substantially . Today Gibraltar, a territory of the United Kingdom, has developed an unique position in the European Union and in the global financial markets.
Culturally, Gibraltar reflects the influence and coexistence of Britons and Spaniards with a clear Mediterranean flavor.
Continue Reading...
The Spanish tax authorities grant a 15% tax relief on the investments used during any year for the acquisition of the primary residences. This amount is deducted on the calculations of Income Tax.
This is not applicable to non resident individuals and not enough of an incentive to become resident, or at least not the only one.
Our British friends see in this relief a reminiscence of the MIRAS, (mortgage interest relief at source) which was in place in the UK years ago.
The limit of allowable amounts paid is 9,015 Euros, to which 15% is applicable. Therefore the maximum tax relief available will be 1,352 Euros.
Published in 2005 by the Spanish Embassy in London and Dublin (ICEX), the book How to Buy your Home in Spain still offers sound advice on legal and tax matters. It is important to note that the tax information regarding Capital Gains Tax has changed and currently the rate is 18%.
Please read the article attached which includes the 2007 tax reforms in Spain.
Otherwise, at today's date everything remains very much the same in the book. Contact Fernando@konsilia.es if any queries.
Continue Reading...I am looking into the possibility of buying some properties in Spain for investment purposes. Is it better from a tax point of view to do this as an individual or as a company? D. Searle, Brighton UK
From an investment point of view the company option must be considered. The main reason is that the company offers the possibility of organising the business in a more professional way, keeping it separate from your private assets. The company will pay corporation tax when disposing of the property of 25-30% which is higher than personal tax at 18%. This is perhaps the only downside of the company option. The company structure is exempted from the annual Wealth Tax and Income Tax for non resident individuals, which means that usually for more than €600,000 it could be more efficient to run the properties using a company. From an Inheritance Tax point of view the company may offer more opportunities to organise your estate planning, if we organise the shareholding efficiently or use international structures and trusts. Another advantage of using a company is that the company will be able to rent the properties and claim the original VAT paid if a proper trading activity is registered for tax purposes. Capital allowances or depreciation can be claimed as a deductible expense in yearly bases if the company files accounts statutorily, which will reduce the capital gains tax payable over time. Management expenses can be also offset against income and the directors can draw a salary too. It is always worth asking your adviser to outline the difference between company and private acquisition in your particular case, before starting a property investment portfolio.
If the PSOE wins the elections the Prime Minister Mr Zapatero has promised to eliminate this tax and this is also the position of the PP leader Mr Rajoy.
Therefore it is quite likely that this 31st December 2007 the Spaniards and the Non Residents with property and assets in Spain be submitting their last wealth tax return. This tax has been the largest obstacle for international people to establish a residence in Spain. Therefore we are very happy to see the tax going.
Adios Impuesto de Patrimonio.Please keep watching this space.
Adios Impuesto de Patrimonio in SPain.
March 9th, 2008 the day of the next Spanish general elections will mark the end of the Spanish Wealth Tax.
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