Clients with a Belgian management or cash company sometimes consider investing in Spanish real estate through their Belgian company. Possible avenues then include the purchase of full ownership by the company or the purchase of usufruct by the company. However, the latter is complex from a tax point of view. Therefore, this article will briefly explain the split purchase through a company.
What are the advantages of a split purchase through a company?
Usually, individuals wish to invest the cash in their company without taking the cash out of the company. After all, this way they avoid a high tax cost in the first place.
With a split purchase, the individual can become bare owner and the company usufructuary. The company then has the user rights to the property. Also, the company can write off the usufruct.
When the usufruct extinguishes, full ownership returns to the bare owner. This way, you may be able to get more out of the company.
Split purchase through a company: valuation
The right of usufruct held by legal entities has a maximum duration of 30 years in Spain. The value of the usufruct depends on the number of years the company will hold the usufruct. For each year of usufruct, 2% of the value of the full ownership is charged. The maximum value is thus 60% (2 x 30) of the full ownership.
An example. Your company wishes to buy the right of usufruct on a property in Marbella for a period of 25 years. The value of the full ownership is 200,000 euros. The value of the usufruct is then 25 *2 = 50% of the full ownership, i.e. 100,000 euros.
On that 100,000 euros, your company pays registration fees to buy the usufruct. In Andalusia, this is 8%. If, as a private individual, you also wish to acquire the bare ownership, you still need to finance the remaining 100,000 euros. You will also pay 8% registration duties in Andalusia on that 100,000 euros.
Note: If you personally wish to stay in the Spanish property, benefits of all kinds are due.
The tax implications depend on your planned activities. Typically, buyers plan to rent out the property. Spanish tax authorities will generally view a Belgian company with usufruct in Spain as non-resident. The implications are therefore limited.
It is different for the Belgian tax authorities. If a Belgian company makes a split purchase together with its director or manager, a benefit in kind can arise for the bare owner.