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Hi All

This is my first post here, and I would be grateful for any advice as i am thinking of buying a property in Barcelona to live there for less than 183 days a year over the winter, ie non-resident and paying tax and social/health costs in another EU country. I hope that someone can clarify the situation about Spanish taxes and health charges for non-residents, as there is conflicting information on sites i have visited. Apologies for any duplication.

1. Is it better to buy a property through a company. Could this be done via a company formed in Spain or a company based in another EU country? I have heard that buying property via a company has advantages but cannot find much information about this. What are the draw backs?
2. If setting up a branch of a company in Spain based in another EU country, I understand that only spanish company income would be taxed, not total income. At what rate?
3. if working for this branch of a company as a director or employee for less than 183 days a year in spain, what would be the liability for personal tax?

4. If buying a property personally, not via a company, based on a figure of 220,000 euros, what would be the

a. Valor catastral. I understand this is between 20-65% of the real value of the purchase price. How is this determined?
b. IBI. I understand this can vary between 0.5% to 1% of a. Again, how would this be determined?
c. Property Owners Imputed Income Tax. I understand this is up to 2% of the Valor Catastral per annum, charged at 24 or 25%, even if the property is not rented out. Are there tax breaks as well?
d. Wealth Tax. I understand this has been abolished from jan 2008.
Capital Gains Tax. The 3% withheld buy the seller and paid to the government on the buyer’s behalf (the gap between this an the 18% rate paid when reselling). Is this 3% therefore put on top of the price paid for a property? Can the 3% be avoided?
e. Inheritance Tax. Is there any information as to how this is determined? Again, there is wide variation in rates quoted.

5. How much would be the cost per month in owning a property of

a. water
b. garbage collection

6. Is there usually a charge per month for buildings upkeep or a sinking fund for reconstruction, and what on average would this be?
7. How much would an Asesor charge on average?

8. When buying a property, what are the costs
a.7% transfer tax? How paid?
b. 0.1-1% stamp duty on the sale price? For 220,000 euros?
c. land appreciation tax? What is this?
d. legal fees? How much for conveyancing?
e. licenses? for use of property when not there myself for rental to tourists.

9. What health/social charges are payable by non-residents if any?

At present i live in the Czech Republic, where there is no Council tax, personal tax is 15%, CGT is not payable on property after 2-5 years of ownership, Company tax is 19%, etc, all better than the UK or spain but it is too cold for me in the winter!!

Thanks
 

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Hi All

This is my first post here, and I would be grateful for any advice as i am thinking of buying a property in Barcelona to live there for less than 183 days a year over the winter, ie non-resident and paying tax and social/health costs in another EU country. I hope that someone can clarify the situation about Spanish taxes and health charges for non-residents, as there is conflicting information on sites i have visited. Apologies for any duplication.

1. Is it better to buy a property through a company. Could this be done via a company formed in Spain or a company based in another EU country? I have heard that buying property via a company has advantages but cannot find much information about this. What are the draw backs?
2. If setting up a branch of a company in Spain based in another EU country, I understand that only spanish company income would be taxed, not total income. At what rate?
3. if working for this branch of a company as a director or employee for less than 183 days a year in spain, what would be the liability for personal tax?

4. If buying a property personally, not via a company, based on a figure of 220,000 euros, what would be the

a. Valor catastral. I understand this is between 20-65% of the real value of the purchase price. How is this determined?
b. IBI. I understand this can vary between 0.5% to 1% of a. Again, how would this be determined?
c. Property Owners Imputed Income Tax. I understand this is up to 2% of the Valor Catastral per annum, charged at 24 or 25%, even if the property is not rented out. Are there tax breaks as well?
d. Wealth Tax. I understand this has been abolished from jan 2008.
Capital Gains Tax. The 3% withheld buy the seller and paid to the government on the buyer’s behalf (the gap between this an the 18% rate paid when reselling). Is this 3% therefore put on top of the price paid for a property? Can the 3% be avoided?
e. Inheritance Tax. Is there any information as to how this is determined? Again, there is wide variation in rates quoted.

5. How much would be the cost per month in owning a property of

a. water
b. garbage collection

6. Is there usually a charge per month for buildings upkeep or a sinking fund for reconstruction, and what on average would this be?
7. How much would an Asesor charge on average?

8. When buying a property, what are the costs
a.7% transfer tax? How paid?
b. 0.1-1% stamp duty on the sale price? For 220,000 euros?
c. land appreciation tax? What is this?
d. legal fees? How much for conveyancing?
e. licenses? for use of property when not there myself for rental to tourists.

9. What health/social charges are payable by non-residents if any?

At present i live in the Czech Republic, where there is no Council tax, personal tax is 15%, CGT is not payable on property after 2-5 years of ownership, Company tax is 19%, etc, all better than the UK or spain but it is too cold for me in the winter!!

Thanks
I left Prague to live in Spain partly because of the awful winters but also because of poor quality of service and practically everything on sale and the appalling infrastructure which may in part be a result of its developing country-like low taxation regime.
High wage high tax countries such as Sweden, Norway, Denmark and even to a lesser extent Germany may be equally cold in winter and not very exciting to live in but they generally ienjoy a high standard of living.
Your questions are many and varied so your best recourse may be to go on line and purchase a suitable book unless some knowledgeable person like Steve has time to respond!
I would have thought however that setting up a company for the sole object of purchasing a property would be like cracking a nut with a sledgehammer.
Hundreds of thousands of people from other European countries, many of them wealthy, have purchased property in the 'usual' manner.
 

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Hi All

This is my first post here, and I would be grateful for any advice as i am thinking of buying a property in Barcelona to live there for less than 183 days a year over the winter, ie non-resident and paying tax and social/health costs in another EU country. I hope that someone can clarify the situation about Spanish taxes and health charges for non-residents, as there is conflicting information on sites i have visited. Apologies for any duplication.

1. Is it better to buy a property through a company. Could this be done via a company formed in Spain or a company based in another EU country? I have heard that buying property via a company has advantages but cannot find much information about this. What are the draw backs?
2. If setting up a branch of a company in Spain based in another EU country, I understand that only spanish company income would be taxed, not total income. At what rate?
3. if working for this branch of a company as a director or employee for less than 183 days a year in spain, what would be the liability for personal tax?

4. If buying a property personally, not via a company, based on a figure of 220,000 euros, what would be the

a. Valor catastral. I understand this is between 20-65% of the real value of the purchase price. How is this determined?
b. IBI. I understand this can vary between 0.5% to 1% of a. Again, how would this be determined?
c. Property Owners Imputed Income Tax. I understand this is up to 2% of the Valor Catastral per annum, charged at 24 or 25%, even if the property is not rented out. Are there tax breaks as well?
d. Wealth Tax. I understand this has been abolished from jan 2008.
Capital Gains Tax. The 3% withheld buy the seller and paid to the government on the buyer’s behalf (the gap between this an the 18% rate paid when reselling). Is this 3% therefore put on top of the price paid for a property? Can the 3% be avoided?
e. Inheritance Tax. Is there any information as to how this is determined? Again, there is wide variation in rates quoted.

5. How much would be the cost per month in owning a property of

a. water
b. garbage collection

6. Is there usually a charge per month for buildings upkeep or a sinking fund for reconstruction, and what on average would this be?
7. How much would an Asesor charge on average?

8. When buying a property, what are the costs
a.7% transfer tax? How paid?
b. 0.1-1% stamp duty on the sale price? For 220,000 euros?
c. land appreciation tax? What is this?
d. legal fees? How much for conveyancing?
e. licenses? for use of property when not there myself for rental to tourists.

9. What health/social charges are payable by non-residents if any?

At present i live in the Czech Republic, where there is no Council tax, personal tax is 15%, CGT is not payable on property after 2-5 years of ownership, Company tax is 19%, etc, all better than the UK or spain but it is too cold for me in the winter!!

Thanks
I'm gonna answer a few of your more straight forward questions cos you've got so many and I simply dont know the answers lol!!!

Barcelona is very expensive to live in, but it is a beautiful city apparently, altho I've not been.

Properties in Spain are tumbling in value at the moment, but if you want to buy one now, then why not.

Buying properties in Spain is nothing like buying in the UK, there is no stamp duty, the "conveyancing" fees are a percentage of the property price. In fact you can usually put on about 10% to the purchase price to do the deal.

There has been alot of talk recently about illegal builds so tread very carefully when buying and if "you smell a rat" then back away.

Property tax is cheaper than the UK but will vary from area to area, region to region and as I say Barcelona is expensive. Utility bills are about the same as the UK as is food etc (maybe slightly less??)

Dont be fooled into thinking that Spanish houses are anything other than cold in the winter. Due to their design they hold the cold in beautifully, but cool down quickly too. And the winters tend to be windy and rainy a lot of the time. Inheritance tax is a biggie! I think some people do set up companies to get over that one. I dont understand it, but I've gotta feeling that if you die and leave a house in Spain, then your loved ones have to pay 3/4 of its worth BEFORE they can sell it - summat like that???????

Thats about the extent of my knowledge. I think you need to speak to a Gestor or an Abogado in Spain to get the questions answered accurately. But you may get a few more people giving you some more "titbits" for you to think about

Jo xxxx
 

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I've been monitoring my utilities bills and I've come to the conclusion that electricity is more expensive here than in Prague.
We had a large four bedroomed house in the CR with water from our own well pumped up so everything was electric - heating, cooking, flushing the loo, using taps,pump for the heated swimming pool etc. We used a lot of water to keep our large garden in good condition -water was free but pumping it up wasn't. Our monthly bills averaged at around £350 - £400 pcm.
Electricity and water bills for a house of the same size here average around £250 a month but........we don't need to heat all day in winter or use the a/c in the summer - the house is light and airy. We burn logs if it's really cold or generally miserable. Because we have a large garden the sprinklers are on most summer nights. If it were as cold here as in the CR I'd guess we'd be looking at over £600 a month.
Another drawback in Prague was the enormous number of tourists who literally fill the city centre, bars and restaurants practically year-round. Stag parties were a particular curse.
Barcelona is also touristy but big enough to make them less noticeable -even the stags and hens..
 

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Wow, a well wriiten post but too much for even an enthusiastic amateur like me. Also there are too many variables to make much sense. So, some general comments

1) SEARCH this forum. Scanning the questions MANY have already been discussed.

2) ALWAYS remember that Spain is almost 50 states - there are MANY local laws - much more than you get in the UK. Sorry no knowledge about Czech Republic

3) Much of the factual stuff changes OFTEN (and by state) You need to see a gestor and probably a tax advisor too. Searles book is mega dry but you can buy it from this site. It will give an overview BUT be prepared for it to be outdated or incomplete. How can we say what an asesor would cost as this would depend on exactly what you would ask him to do. What I would say is that he should save his charges many many times over. A good one will give his/her first appointment free of charge. See is there is chemistry. If not, next

4) BCN? Great city, everything anybody could possibly want. Two issues that put me off - wetter/colder winters than the Costas (Blanca, Del Sol) and the language situation. Huge cosmopoliatan population - rubbish football though.

5) Why would you buy? Do you believe that property will be a good investment over the next 5 years? I don't BUT it's your money. Unless you are buying distressed property - unlikely as BCN is one of only two/three cities in Spain with an acute housing shortage (Bilbao, Cádiz)
- I BELIEVE there is still a way down on prices generally. If you take a risk on distressed purchases you SHOULD get a decent return but in BCN, I would question whether you would want to tie up 200,000 euros plus. They have had their boom years. A friend bought in 1989 at 200k and recently sold at 1 million. How much further can an apartment go?


6) The biggest shock to the system is the costs, taxes etc on sale AND purchase of a property
As a rule of thumb be grateful for any change you get out of 12% which even on a 300k property is a whopping 35,000 euros. It makes Thailand a dream! Community charges, garbage charges are absolutely the least of your worries. As an example for a detached villa in a bankrupt city I think mine were something like 295 euros in 2009

Remember to be open with the asesor. They play the system here (it´s a national pastime) and support the client rather than the system. Do NOT be surprised to pay cash (without invoices!) if you want big discounts etc ......although I did not say that.

Good Luck
 

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Too many questions to working in Spain and tax .

Hi All

This is my first post here, and I would be grateful for any advice as i am thinking of buying a property in Barcelona to live there for less than 183 days a year over the winter, ie non-resident and paying tax and social/health costs in another EU country. I hope that someone can clarify the situation about Spanish taxes and health charges for non-residents, as there is conflicting information on sites i have visited. Apologies for any duplication.

1. Is it better to buy a property through a company. Could this be done via a company formed in Spain or a company based in another EU country? I have heard that buying property via a company has advantages but cannot find much information about this. What are the draw backs?
2. If setting up a branch of a company in Spain based in another EU country, I understand that only spanish company income would be taxed, not total income. At what rate?
3. if working for this branch of a company as a director or employee for less than 183 days a year in spain, what would be the liability for personal tax?

4. If buying a property personally, not via a company, based on a figure of 220,000 euros, what would be the

a. Valor catastral. I understand this is between 20-65% of the real value of the purchase price. How is this determined?
b. IBI. I understand this can vary between 0.5% to 1% of a. Again, how would this be determined?
c. Property Owners Imputed Income Tax. I understand this is up to 2% of the Valor Catastral per annum, charged at 24 or 25%, even if the property is not rented out. Are there tax breaks as well?
d. Wealth Tax. I understand this has been abolished from jan 2008.
Capital Gains Tax. The 3% withheld buy the seller and paid to the government on the buyer’s behalf (the gap between this an the 18% rate paid when reselling). Is this 3% therefore put on top of the price paid for a property? Can the 3% be avoided?
e. Inheritance Tax. Is there any information as to how this is determined? Again, there is wide variation in rates quoted.

5. How much would be the cost per month in owning a property of

a. water
b. garbage collection

6. Is there usually a charge per month for buildings upkeep or a sinking fund for reconstruction, and what on average would this be?
7. How much would an Asesor charge on average?

8. When buying a property, what are the costs
a.7% transfer tax? How paid?
b. 0.1-1% stamp duty on the sale price? For 220,000 euros?
c. land appreciation tax? What is this?
d. legal fees? How much for conveyancing?
e. licenses? for use of property when not there myself for rental to tourists.

9. What health/social charges are payable by non-residents if any?

At present i live in the Czech Republic, where there is no Council tax, personal tax is 15%, CGT is not payable on property after 2-5 years of ownership, Company tax is 19%, etc, all better than the UK or spain but it is too cold for me in the winter!!

Thanks
Hi and hello,

buying in the name of a company only makes sense for a company with profits.
When it earns nothing there is no point to register a property in its name.

A health farm or wellness place might be suitable, though, but would be costly to put up.
No idea, if a company in the UK could serve for buying property in Spain. Theoretically it might be, though.

Also make sure you find out what yearly auditing of your Spain company would cost. That alone could be a financial killer. Some years ago it seemed the big craze in Tenerife to register villas in the name of companies. At the time, even a yearly Euros 1000 seemed pretty high for accounting.

You can't just become self employed for Social security and income tax for 6 months a year. It works yearly. Minimum may still be Euros 250 to become self employed for a person over 45 years to the best of my knowledge.

SNIP

Costs of inheritance as well as property taxes are almost a science. It is impossible to answer all your questions, as much depends on value of property, bought resale or off a construction company, for how long real estate was owed by you and if it is first or 2nd residence, to name just a few hurdles.

By the way, water and garbage collection might have different tariffs within Barcelona suburbs. Electricity is handled by different firms nowadays, which is only practical to look into on mainland Spain and not on Spain islands.

You may only expect a good service to look after a rental business if you pay accordingly or perhaps, when the agency comes highly recommended. Friends of mine had bad experience.

Any government medical insurance from your European home country may be used in Spain with the appropriate European card for it. One from Prag will be as good as one from the UK. It is valid for holidays as well as for residence. But some Spanish language knowledge is important.


Hoping that my contribution will help you a little.

Gabriele
 

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Any government medical insurance from your European home country may be used in Spain with the appropriate European card for it. One from Prag will be as good as one from the UK. It is valid for holidays as well as for residence. But some Spanish language knowledge is important.

Gabriele
Sorry Gabrielle this isn't quite correct in all circumstances. For the OP, maybe under their circumstances :)

A UK Government medical insurance, if you mean the NHS, is not valid for use in Spain if you reside here unless you are a retiree. If you are a pre retiree in most cases you have to rely on private health.

An EHIC card issued by the UK government will cover you whilst on holiday over here, but not if you are a resident over here.
 

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Hi All

1. Is it better to buy a property through a company. Could this be done via a company formed in Spain or a company based in another EU country? I have heard that buying property via a company has advantages but cannot find much information about this. What are the draw backs?

e. Inheritance Tax. Is there any information as to how this is determined? Again, there is wide variation in rates quoted.
Check out the following site for the above (SNIP)
I am about to complete a sale going down this route (via a UK Ltd because UK taxes (Corporation & CG taxes) seem to be lower than in most other EU Countries) but I am not doing it thru Wincham because they want to charge GBP 5000 for the pleasure (also ... when I asked them for a detailed breakdown of their fees they didn't bother to reply). My Spanish lawyer is charging me Eu 800 (inclusive of VAT) for the conveyancing plus I'll have to pay for translating the mems&arts of association.
 

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Sorry Jerzy I'm not prepared to allow a link in here to that company. They have joined several forums I know and mislead people by various means, and that doesnt seem the actions of a reputable company


Sorry



BTW, I set up a Ltd co in the UK for £20 :)
I was just giving a link to a site where one could read up on the pros & cons of buying via a UK Ltd Company. I certainly don't want to promote their business (unless they want to pay me HUGH wads of intoductory commision). Another site where this Company expanded on its proposition is:
Tax Tips Forum :: Free Tax Advice • Spanish Property UK LTD/LLP Company : International
Maybe that won't be snipped (he said keeping his legs crossed:eek:)
 

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I was just giving a link to a site where one could read up on the pros & cons of buying via a UK Ltd Company. I certainly don't want to promote their business (unless they want to pay me HUGH wads of intoductory commision). Another site where this Company expanded on its proposition is:
Tax Tips Forum :: Free Tax Advice • Spanish Property UK LTD/LLP Company : International
Maybe that won't be snipped (he said keeping his legs crossed:eek:)
I know what you are saying

I'm just making the point that any company that feels the need to mislead people on a forum is a company I wouldnt use.:)

(and you havent either)
 

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I know what you are saying

I'm just making the point that any company that feels the need to mislead people on a forum is a company I wouldnt use.:)

(and you havent either)
How have they 'mislead' people? The idea of buying property via a Company is very old but their dissertation on Spanish Inheritance Tax is interesting.
 

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How have they 'mislead' people? The idea of buying property via a Company is very old but their dissertation on Spanish Inheritance Tax is interesting.
They had a habit of going on forums as private individuals and describing what good experiences that had received in their dealings with that company. They just pretended to be someone else, but didnt realise we can track their IP's etc.
 

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They had a habit of going on forums as private individuals and describing what good experiences that had received in their dealings with that company. They just pretended to be someone else, but didnt realise we can track their IP's etc.
I understand.
 
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