May 5, 2025

How to Buy a Property in Spain Through a Company

Buying Spanish Property: An Overview

Buying property in Spain has long appealed to foreign investors and individuals alike, thanks to its warm climate, diverse regions, and relatively affordable real estate. Whether you’re looking for a vacation home, rental investment, or a long-term relocation option, it’s important to understand the full implications of the process of buying. More importantly, buyers must evaluate whether purchasing property through a company is the right path based on their personal and financial goals.

Spain offers numerous opportunities for property investment, but choosing the correct ownership structure—either as an individual or through a company—can make a significant difference in your tax liabilities, legal obligations, and financial flexibility. This article will guide you through the pros and cons of purchasing Spanish property through a company, help clarify the steps involved, and explain the financial and legal nuances of this approach.

Why Buy a Property in Spain?

Spain’s real estate market remains one of the most attractive in Europe. Foreigners frequently purchase property in Spain due to the country’s excellent healthcare, affordable lifestyle, vibrant culture, and easy access from across Europe. When you buy a property in Spain, you can choose from coastal homes, countryside villas, and urban apartments. But the decision to purchase property in Spain is not just about location—it also involves careful planning regarding tax, ownership, and usage.

Some investors buy property in Spain purely for rental income, while others prefer long-term capital growth or personal holiday use. Whatever the motivation, the question of how to structure the purchase—whether to buy as an individual or through a company—requires detailed consideration. Using a limited company can open doors to tax efficiencies but also adds complexity that not all buyers are ready to handle.

Spain Through a Company: What It Means

Acquiring property in Spain through a company—whether a Spanish company or a foreign company—means the legal owner on the property registry will not be an individual, but a legal entity. This legal entity may be newly formed for the purpose of the purchase, or an existing business expanding into property investment in Spain. In many cases, property through a company also allows buyers to integrate the investment into their broader business strategy.

The choice of company structure is essential. Many foreign buyers form a Spanish limited company (S.L.) for this purpose. An S.L. is the most common form of limited liability company in Spain and is relatively straightforward to establish. It provides liability protection and can allow for more flexible tax management, depending on how the property is used and the value of the property.

Advantages of Buying Property Through a Company

There are clear tax advantages to purchasing real estate in Spain through a company. Some of the primary benefits include:

Tax Efficiency: The corporate tax rate of 25% may be lower than individual income tax rates, particularly for non-residents or those with high personal income.
Capital Gains Tax: When the company sells the property, it may benefit from deductions not available to individuals, reducing the effective capital gains tax owed.
Ownership Flexibility: Owning property through a company can make it easier to transfer ownership via share transfers, reducing notarial and registry costs.
Liability Protection: Personal assets are separated from those of the company, protecting owners from legal claims related to the property.
Estate Planning: Shares of the company can be transferred to heirs more flexibly than direct ownership of property.

These advantages of buying property are particularly relevant when purchasing high-value assets or when property is intended for rental or business use. Businesses may also use the property to support operations in Spain or to serve as staff accommodations.

Disadvantages of Buying Through a Company

However, there are also disadvantages of buying property through a company. For instance, the company must fulfill ongoing administrative obligations, including bookkeeping, corporate filings, and annual tax returns. Setting up a Spanish company also involves upfront costs and legal procedures.

In addition, if the property is intended for personal use, Spanish tax authorities may scrutinize the transaction to ensure that it’s not an attempt to avoid income tax. When property is owned by a company but used privately, shareholders may be taxed as if they received a benefit in kind—particularly if they are also directors of the company. Property for personal use does not always benefit from the same tax deductions as investment property, and this should be taken into account before proceeding.

Foreign Company vs Spanish Limited Company

Foreign buyers may wonder whether to purchase property through a foreign company or set up a Spanish limited company. Each option has advantages, depending on the intended use of the property, tax residency, and the country of incorporation. A foreign company that wishes to own Spanish real estate must register with the Spanish tax agency and may need to appoint a fiscal representative in Spain.

Using a foreign company may simplify things if the buyer already owns a business abroad, but this can complicate property registration and local compliance. On the other hand, forming a Spanish company aligns the property with domestic legal structures and makes interaction with local authorities easier. The Spanish S.L. is a popular structure for this reason and is favored for owning property through a company in Spain.

Steps to Purchase a Property Through a Company

The steps to purchase a property in Spain via a company involve several key phases. These include:

Incorporation: Choose the name of a company, submit it for approval, and draft the company statutes. A notary will assist in the process of establishing the business in Spain.
Bank Account: Open a Spanish bank account in the company’s name and deposit the share capital.
Tax Registration: Obtain a tax identification number (CIF) from the Spanish tax agency.
Property Acquisition: Once the company is established, begin the property purchase process. Ensure the property registry is updated with the correct ownership.
Tax Payments: Pay transfer tax or VAT and stamp duty, depending on whether the property is new or a resale.

Throughout the process, legal advice is essential. Each document must be translated into Spanish and officially registered. The company must also ensure that the intended use of the property is consistent with its declared business activity.

Taxes When You Buy Property in Spain

When you buy property in Spain through a company, be aware of all taxes involved:

Transfer Tax: Typically 6-10% for existing properties.
VAT (IVA): 10% on new properties, plus 1.5% stamp duty.
Income Tax: If the company earns rental income, it must report and pay tax on that income.
Capital Gains Tax: Paid when the property is sold. The company may pay a different rate than individuals.

These tax liabilities can add significantly to the price of the property. The community in which the property is located may influence the tax rate, and buyers should be aware of regional variations. Understanding these costs early on helps you plan the total budget for your property investment.

Legal Structures and Property Ownership

There are many considerations when deciding whether to buy property through a company or as an individual. Ownership through a company often changes how the property is used, taxed, and passed on to heirs. Property ownership via an S.L. must be reflected in the property registry, and the property is owned by the legal entity, not the shareholder directly. The property is acquired and maintained using company funds, and any expenses related to the property must be accounted for in company records.

If you later decide to sell the property, there may be the option of selling the shares of the company instead—thus avoiding certain transaction costs and simplifying the legal process.

Summary: Choosing the Right Path

The decision of whether to buy property through a limited company depends on your objectives. If you’re investing in multiple properties, renting them out, or using them for business, the tax benefits can be significant. If, however, you’re buying a holiday home for personal use, it may be simpler and more cost-effective to purchase as an individual.

Always seek legal advice to guide you through the process and ensure you’re complying with Spanish tax and property laws. The right structure can help you avoid penalties, reduce taxes, and simplify ownership.

Internal Resources

External Resource

For official guidance, visit the Spanish Tax Agency (Agencia Tributaria).

Frequently Asked Questions

Yes, a foreign company can buy property in Spain. However, it must be registered with the Spanish Tax Agency and comply with local tax and reporting obligations.

Taxes include transfer tax or VAT (depending on whether the property is new or resale), stamp duty, income tax on any rental income, and capital gains tax if the property is sold.

It depends on the intended use. A company may offer tax advantages for investment or rental properties, but comes with more administrative and legal responsibilities.

The standard corporate tax rate in Spain is 25%. This applies to profits earned by companies, including rental income and gains from property sales.

No, a foreign company can purchase property in Spain, but it must be properly registered in Spain and meet all fiscal and legal requirements.

Interested in learning more? Visit our Properties page to explore available listings, check out our About Us page to get to know our team, or Contact Us directly for any inquiries.

If you’re interested in Spanish Property Market 2025: Key Trends & Outlook, don’t miss our previous article: Spanish Property Market 2025: Key Trends & Outlook

Did you like this article about How to Buy a Property in Spain Through a Company? Please leave a like and share this article using the social buttons below!