Legal entity for commercial real estate in Spain

When purchasing commercial real estate, the transaction is often registered in the name of a legal entity. But why is it more profitable to register such objects through a company in Spain, and not in your own name?

Advantages of using a legal entity

Purchasing commercial real estate as a legal entity is a more convenient and profitable option. There are two main reasons why investors choose this route.

Firstly, it significantly optimizes tax planning. Secondly, transactions with objects are completed more simply: the process of transferring ownership rights becomes less complicated.

It is important to consider that tax planning is a complex area with many nuances known only to professionals. Therefore, it is necessary to develop individual solutions for each client, taking into account his specific situation, status in the country and investment goals.

Even the Spaniards themselves often resort to the help of specialists when solving tax issues. We also strongly encourage our partners to follow this example. It is important to have a basic understanding of tax principles in order to effectively interact with experts during consultations.

Transferring money from Russia to the account of a Spanish company is much easier than to the account of an individual, especially if this person does not have a residence permit in Spain. In addition, any shareholder of a Spanish company can easily transfer funds in the form of share capital or a loan to purchase real estate.

Tax planning

When purchasing commercial property in Spain, individuals are required to pay value added tax (VAT). However, there are benefits for companies: legal entities can submit a special application and receive an exemption from paying this tax.

In addition to VAT, it is important to consider the difference between personal income tax and corporate income tax. Corporate income tax is significantly lower, especially in the first two years, when the rate is only 15 percent.

Also, when real estate is owned by a company, it is easier to manage than an individual, since the company can legally reduce the tax base through certified expenses.

Re-registration of the transaction

Re-registration of a transaction, if the object belongs to a legal entity, is carried out according to a different scheme compared to a standard sale between individuals. In this case, there is not a transfer of the real estate itself, but a sale of the company that owns this property.

All you need to do is sign the agreement and make changes to the register of enterprises, indicating the new owner and director of the company.

It is important to consider that the income tax benefit is provided to a company only once, in the first two years from the date of its establishment. Therefore, in some cases it may be more profitable to register a new company and formalize ownership of it.

How to create a legal entity for commercial real estate

Establishing a legal entity for commercial real estate in Spain is similar to registering any other company. The most accessible and simple form of enterprise in Spain is the Sociedad de Responsabilidad Limitada (S.L.).

The founder of such a company can be one person, and it is not necessary to have Spanish citizenship or a residence permit in Spain. All you need is a Foreigner Identification Number (NIE). The minimum authorized capital is 3 thousand euros.

The registration process usually takes approximately 1.5 months.

Checking the legal entity when purchasing an object

An important aspect when purchasing commercial real estate by re-registration of ownership of a company is the verification of this company.

Such a transaction is easier to carry out, but there are several nuances. First of all, you need to make sure that the company has no debts to other enterprises or to the budget. This often requires an audit, especially if the company has previously been active.

In addition, it is necessary to check the ownership of the real estate itself, which is transferred along with the company.

Practical solution

GG Barcelona Real Estate offers comprehensive solutions for its clients who invest in commercial real estate. We are engaged in the re-registration of legal entities or the creation of new ones with the support of our lawyers.

Thus, clients who have selected a property from our exclusive commercial real estate catalog can use the turnkey service by prior arrangement.