Investing in Spain: the trade-off between buying privately or via company

The choice between buying Spanish property as a private individual or through a company depends primarily on your purpose of use and the value of the property. As a rule, a private purchase is fiscally advantageous for a second residence with its own use. A purchase through a company becomes interesting for properties with a higher transaction value (luxury properties), when there is active rental, or in the context of inheritance planning.

Also listen to our podcast episode on buying with a company in Spain.

Many Belgian investors struggle with how to structure their Spanish dream property. A wrong choice could lead to double taxation or unnecessarily high Benefit of All Nature (VAA). In this analysis, we provide a direct frame of reference based on three crucial trade-offs.

Consideration 1: What is your primary objective?

The purpose of the property determines tax optimisation. Is it pure enjoyment, or return?

Situation A: Own use only (Second residence)

Will you mainly use the property yourself and only occasionally rent it out to family? Then buy private.

• Fiscal efficiency: In both Spain and Belgium, this is usually the most economical option.
• No VAA: You avoid tax on the Benefit in Kind, which would be payable for private use with a company.
• Added value: In Spain, capital gains on sale can be taxed more favourably for individuals under certain conditions.

Situation B: Investment property (Yield & Rental)

Are you aiming for maximum returns and high occupancy through rentals? Then the company in pictures.

• Tax on rental income:
  • Spain: For Spanish tax purposes, there is little difference in rate between a non-resident natural person and a company (standard rate 19% for EU residents on net rental income).
  • Belgium: Here lies the big difference. As a private individual, foreign property income counts towards the progression reservation. This can increase your average tax rate on your other income. In a company, this income is often exempt or you can deduct expenses (depreciation, travel, interest) that are not deductible privately.
• Staggered valuation: A company offers opportunities for staggered valuation of realised capital gains, a tool not available to private individuals.

Expert Insight: "Note on rentals: Regardless of structure, for tourist rentals you need a valid rental licence (vivienda turística) needed. The rules for this are regionally defined and are increasingly strictly enforced in regions such as the Balearic Islands and Andalusia."

What are the practical steps to buying with a company?

Trade-off 2: Funding mix and Liquidity

The origin of resources is often decisive for the choice of structure.

• Private resources available: Do you have sufficient net savings? A private purchase is administratively simpler and avoids annual company fees.
• Resources tied up in the company:
  • Do you have an operating company with a lot of liquidity (the so-called 'potting ground')? First, analyse the withholding tax upon payment.
  • Is the tax cost of taking money to private (dividend distribution) higher than the long-term cost of the Benefit in Kind? If so, a purchase in the company designated.
• External Financing (Leverage): Companies often have better access to credit markets for real estate.
  • International mortgages: For financing luxury real estate through private banking or international mortgage loans, a company structure is often a requirement of the bank.

Read more about renting out in Spain.

Trade-off 3: Purchase price and wealth tax

The value of the property directly affects two heavy tax items: the Benefit of All Nature (in Belgium) and Wealth Tax (in Spain).

1. Benefit of All Nature (VAA) in Belgium

If you buy with a company and stay there yourself, you will be taxed privately on this benefit.

• Average property: In a standard flat, this SG&A is often not too bad and is manageable.
• Luxury property: In high-value villas, the SG&A increases significantly. The company has to charge a market-based rent or SG&A to the manager. If this rises too high, the company's tax benefit may evaporate.

2. Spanish Wealth Tax (Impuesto sobre el Patrimonio)

Spain has a wealth tax which varies by autonomous region.

• Exemption: Typically, the first € 700.000 per taxpayer exempt.
• Rates: Above the exemption, rates range from 0.20% to as much as 3.50% for assets above €10 million (including the national solidarity tax on large assets).
• The Company route: Shares in a (foreign) company were historically a way to minimise Spanish wealth tax, although Spanish tax authorities are increasingly looking through this (look-through approach).

Important Nuance: Emigration to Spain

The above trade-offs apply to non-residents (tax residence in Belgium). Once you emigrate to Spain, the playing field changes dramatically.

• As a Spanish resident, you will be taxed on your global income and assets.
• Holding Belgian property in a company while living in Spain can lead to complex discussions about the company's actual seat. A tax exit strategy is essential before your move.

Frequently asked questions (FAQ)

Below are answers to the most frequently asked questions about property structuring in Spain.

Is it more fiscally advantageous to put a house in Spain in the business?

Not necessarily. For a property under €700,000 that you only use privately, buying on a company basis is often more expensive due to the Belgian Advantage of All Nature (VAA) and capital gains tax on sale. A partnership is usually only interesting for luxury property, active rental, or if the funds are "trapped" in the partnership.

How much is wealth tax in Spain for non-residents?

This varies by region. There is a general exemption of €700,000 per person. In regions such as Madrid or Andalusia, the wealth tax is (partly) abolished or compensated, but beware of the national "Solidarity Tax" for net wealth above €3,000,000.

Can I split the purchase between private and company?

Yes, this is called a split purchase (usufruct by the company, bare ownership privately). This is a sophisticated technique that must be carried out very strictly to avoid recharacterisation by the tax authorities (both in Belgium and Spain). The valuation of the usufruct is crucial here.

Do I need a rental licence if I rent through a company?

Yes. The ownership structure (private or company) is separate from the administrative requirement. For any kind of short-term tourist rental, you will need a rental licence in Spain and must comply with regional requirements.

About the author: Glenn Janssens is a lawyer specialising in Spanish real estate transactions and tax regulations. Since 2017, he has been helping Belgian and Dutch individuals and entrepreneurs to safely purchase and structure real estate in Spain. He guides files from A to Z: from due diligence, ownership and tax control to estate planning and optimisation for residents and non-residents. Thanks to his years of experience, hundreds of handled files and focus on transparent communication, Glenn makes complex Spanish legislation understandable and practically applicable for every property buyer.