Setting up a Limited Company can be an option not just for the creation of a new business but also for the ownership of property.
Should it be in the UK or Spain?
What about training, property rentals and the tax man?
Spain has traditionally had a very formal approach to company ownership and as with many aspects of commercial life in Spain it is still necessary to attend a notary to constitute a company in this country. I can personally recall being surprised to learn many years ago that a company formation which could take 30 minutes of form filling and a £50 cheque or credit card payment in the UK could take 2 weeks a trip to the notary and lodging of 3.000€ in a Spanish bank in Spain for the formation of a Spanish limited company.
The costs of constituting a company in Spain are now lower and there are now also more incentives to companies. An accountant can advise on some of the new incentives for employing those under age 35 and advise of other government schemes to help with a Spanish limited company. All the evidence on companies shows that those that train their staff are more likely to be successful in the long term. There are regional and national incentives to training and as the long slow recovery begins in Spain everyone hopes that this type of incentive can help in reducing unemployment particularly amongst the young.
English limited company owners with business or property in Spain also need to keep up to date with their obligations in Spain. For example if an English limited company owns Spanish property and rents that property out for holiday rentals there is an obligation to pay tax in this country as the property is here. For many years these companies declared their income in the UK but from a practical point of view it is Spain that is providing the roads, utilities and public services that the visitors use when they are here so Spain should receive the tax on the rentals.
The obligation to make an annual declaration as a non-resident company with property in Spain ceases from 2014. However it is very important for foreign companies to have a notification address that is provided to Hacienda – the tax authority – in Spain if the foreign company is a property owner here. Failure to do so can mean that a tax notification is missed and there is then the potential for fines to be charged where the matter could have been dealt with less expensively and more quickly if you are properly advised. Prevention is always better than cure with the tax authorities in all countries.
For more information on commercial or property law, please feel free to contact De Cotta Law. We have offices in Mijas-Costa/Calahonda, Coin, Nerja and the Canary Islands.
Tel: +34 952 931 781