The Spanish government is proposing to abolish a tax that is currently levied on foreign companies owning property in Spain in order to attract more investment from abroad.
The tax currently stands at 3pc per annum of the company’s holdings in Spain. The change in the law, currently going though the Senate, is expected to come into force early next year but will only benefit companies that are not domiciled in tax havens.
The tax was originally introduced to stop property ownership through foreign companies when at the time, there was no tax at all, and the government gained nothing. Furthermore, when a property in Spain was sold which was the only asset to the company, there was no change in ownership of the property in the land register, as the company was sold and not the property, and therefore none of the taxes associated with the sale were made either. By removing the tax, it can be easier and cheaper to buy, sell, and inherit property in Spain through a foreign company, rather than face the cost and hassle of doing the transaction in Spain.
This of course will benefit those people wishing to purchase property at the top end of the market as the cost of maintaining a foreign company would not be beneficial to the holding of low priced property.
Nevertheless, it is another gesture by the Spanish government to move the enormous stock of unsold property currently in Spain.