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Buying Property in Spain Through a Company: Pros and Risks

Written by Margaret on . Posted in Buying a property in Spain, Real Estate Law.

Buying property in Spain is often an exciting decision, especially for international buyers looking for a second home, an investment property, or a long-term base in Europe.

One question we are often asked is:

“Should I buy the property personally, or through a company?”

The answer is: it depends.

Buying through a company may be useful in certain cases, particularly where the property forms part of a wider business or investment structure. However, it is not always cheaper, simpler, or safer. In fact, for many private buyers, using a company can create additional tax, accounting and legal obligations.

Before deciding, it is important to understand both the advantages and the risks.

1. Why do some buyers consider buying through a company?

International buyers may consider purchasing Spanish property through a company for several reasons:

  • they already own a company abroad;
  • they are buying for investment purposes;
  • they plan to rent the property;
  • they want to separate personal and business assets;
  • they are buying with several investors;
  • they are thinking about inheritance or succession planning;
  • they have been advised that a company may reduce tax.

Some of these reasons may be valid. Others need to be reviewed very carefully.

The most important point is that a company should not be used simply because it sounds more sophisticated. The structure must make legal, tax and practical sense.

2. Possible advantages of buying through a company

Asset separation

Buying through a company can help separate the property from the buyer’s personal estate. This may be relevant where the property is part of a larger investment portfolio or commercial activity.

For example, if several investors are buying together, a company can provide a clearer framework for ownership, decision-making, profit distribution and exit.

Business use or rental activity

If the property is genuinely connected to a business activity, such as professional rentals, serviced accommodation or wider real estate investment, corporate ownership may sometimes be appropriate.

However, the activity must be real and properly documented. A company that owns one property used mainly as a holiday home may not be treated in the same way as an active real estate business.

Easier transfer of shares in some cases

In some structures, it may be possible to transfer shares in the company rather than the property itself. This can sometimes be relevant in investment planning or succession planning.

However, this is a highly technical area. Spanish anti-avoidance rules, tax consequences and reporting obligations must be reviewed before assuming that a share transfer will be simpler or cheaper.

Succession and estate planning

For families with assets in several countries, a company may form part of a wider succession strategy.

That said, this should never be analysed only from a Spanish property perspective. The buyer’s residence, nationality, matrimonial regime, inheritance law, tax residence and family circumstances may all be relevant.

3. The risks of buying through a company

It may not save tax

This is the most common misconception.

Buying through a company does not automatically reduce tax in Spain. Depending on the structure, it may actually increase the total cost.

The company may have corporate tax obligations, accounting costs, filing obligations, possible non-resident tax issues, and future tax consequences when the property is sold or when profits are distributed.

A tax saving at the purchase stage can easily become a tax problem later.

Additional accounting and compliance costs

A company usually involves more administration than personal ownership.

There may be annual accounts, tax returns, bookkeeping, corporate records, legal representation, registered office requirements and professional fees.

For a buyer purchasing a single private holiday home, these costs may outweigh any theoretical benefit.

Personal use of a company-owned property can create tax issues

If the property is owned by a company but used personally by the shareholders or their family, this must be carefully reviewed.

Spanish tax authorities may consider whether there is a benefit in kind, a deemed rental, or another taxable consequence. The arrangement must be commercially and legally coherent.

A company-owned property used privately without proper documentation can become a risk.

Financing may be more difficult

Some banks are more cautious when lending to companies, especially foreign companies or newly created companies.

Mortgage conditions may differ from those offered to individual buyers. The bank may require additional guarantees, corporate documentation, shareholder information and proof of funds.

Selling the property may be more complex

When the time comes to sell, the structure chosen at the beginning becomes very important.

Will the company sell the property?
Will the shareholders sell the company?
Will the buyer accept that structure?
What tax applies in Spain and abroad?
Are there reporting obligations in the buyer’s country of residence?

These questions should be considered before the purchase, not only when the sale is already being negotiated.

4. Spanish company or foreign company?

Another key question is whether the property should be bought through a Spanish company or a foreign company.

A Spanish company may be more familiar to Spanish banks, notaries, registries and tax authorities. However, it also involves Spanish corporate obligations.

A foreign company may already exist and may be convenient from the buyer’s home-country perspective. However, it can create additional formalities in Spain, including powers of attorney, apostilled documents, translations, tax identification numbers and proof of company authority.

In both cases, the structure must be reviewed in Spain and in the buyer’s country of residence.

5. When buying through a company may make sense

Buying through a company may be worth considering where:

  • the property is part of a genuine investment activity;
  • there are several investors;
  • the buyer already has a corporate structure with a clear commercial purpose;
  • the property will be rented professionally;
  • the transaction forms part of a wider estate or tax planning strategy;
  • the buyer needs a clear separation between personal and business assets.

Even then, proper legal and tax advice is essential.

6. When personal ownership may be better

Personal ownership may be simpler where:

  • the property is mainly a family home or holiday home;
  • there is only one buyer or a married couple;
  • there is no real business activity;
  • the buyer wants to keep costs and administration simple;
  • the property will not be part of a wider investment structure;
  • the company would only be created to “save tax”.

In many cases, buying personally is clearer, cheaper and easier to manage.

7. Our practical recommendation

Before deciding whether to buy property in Spain through a company, we recommend asking three questions:

1. What is the real purpose of the purchase?

A home, an investment, a rental business, or a family estate planning tool?

2. What will happen in five or ten years?

Will the property be sold, inherited, rented, refinanced or transferred?

3. Has the structure been checked in both countries?Spanish advice alone may not be enough if the buyer is tax resident abroad.

The right structure is not the one that looks clever on paper. It is the one that works legally, fiscally and practically over time.

Conclusion

Buying property in Spain through a company can be useful in the right circumstances, but it is not a universal solution.

For some buyers, it may offer structure, asset separation and investment flexibility. For others, it may create unnecessary cost, tax exposure and administrative complexity.

At Bennet & Rey, we help international clients review the legal and practical implications of buying property in Spain, whether personally or through a company, so they can make informed decisions before signing.

Thinking of buying property in Spain?

We can review the structure, the legal documentation and the risks before you commit.

Send us an email to: [email protected]

Click here to book a consultation with a lawyer

Buying Property in Spain: What Is the Owners’ Meeting and Why Should You Ask for the Latest Minutes?

Written by Margaret on . Posted in Buying a property in Spain, Property Law.

When buying a property in Spain, many foreign buyers focus on the price, the location, the condition of the property and the title deed. All of this is important. But there is another document that is often overlooked and can reveal very valuable information:

If the property forms part of a building, residential complex or urbanisation, the buyer is not only buying a private home. They are also becoming part of a community of owners (comunidad de propietarios). This means they may be affected by community rules, budgets, repairs, debts, disputes and future decisions.

What is the community of owners in Spain?

In Spain, buildings divided into apartments, premises, garages or individual units are usually governed by the Horizontal Property Law (Ley de Propiedad Horizontal). The law regulates the relationship between the private property of each owner and the common elements of the building or complex.

These common elements may include:

  • the roof;
  • façade;
  • lift;
  • stairs;
  • garden;
  • swimming pool;
  • parking areas;
  • communal installations;
  • structural elements;
  • shared services.

The community of owners is responsible for managing these common elements. Each owner normally pays community fees according to their participation quota.

What is the owners’ meeting?

The owners’ meeting, or junta de propietarios, is the meeting where the owners of the building or complex take decisions about the community.

Under Spanish law, the owners’ meeting has powers to approve budgets, accounts, repairs, appointments, community rules and other matters of general interest to the community. The Horizontal Property Law expressly regulates the powers of the owners’ meeting and the content of the minutes.

In practical terms, this is where the community may decide, for example:

  • to approve ordinary community expenses;
  • to approve extraordinary repairs;
  • to impose a special contribution or derrama;
  • to repair the roof, façade, lift or swimming pool;
  • to take legal action against owners or third parties;
  • to approve restrictions on tourist rentals;
  • to discuss problems with noise, leaks, debts or structural issues;
  • to appoint or replace the administrator or president.

What are the minutes of the owners’ meeting?

The minutes are the written record of what happened at the meeting. They usually include the date, attendees, agenda, discussions, agreements adopted and voting results. The Horizontal Property Law states that the agreements of the owners’ meeting must be recorded in a minutes book, and Article 19 regulates the minimum content of those minutes.

This document can be extremely useful for a buyer because it may reveal issues that are not always obvious from a viewing, an estate agent’s description or even the title deed.

Why should you ask for the latest minutes before buying?

Because the latest minutes can tell you what is really happening inside the community.

A property may look perfect, but the community minutes may show that the building has problems, that expensive works are being discussed, or that there are tensions between neighbours.

For example, the minutes may reveal:

1. Possible future special contributions

One of the most important reasons to review the latest minutes is to check whether there are planned or discussed works that may result in a “derrama”, which is an extraordinary contribution paid by owners.

This could include:

  • roof repairs;
  • façade renovation;
  • lift replacement;
  • structural works;
  • swimming pool repairs;
  • accessibility improvements;
  • legal proceedings;
  • major maintenance works.

A buyer should know this before completing the purchase. Otherwise, they may discover shortly after buying that they are expected to contribute to a significant community expense.

2. Building problems or maintenance issues

The minutes may refer to leaks, damp, cracks, façade problems, lift failures, garage defects, drainage issues or disputes with contractors.

These issues may not appear in the property description, but they can affect the value, comfort and future cost of the property.

3. Restrictions on use

In some buildings or communities, there may be discussions or rules about tourist rentals, short-term lets, business activity, pets, noise, use of terraces, air conditioning units or changes to façades.

This is especially relevant for foreign buyers who intend to rent out the property, use it as a holiday home or make alterations.

4. Debts within the community

The latest minutes may refer to owners who are not paying community fees, legal action for unpaid debts or financial pressure within the community.

Even if the seller provides a certificate confirming their own community fees are up to date, the buyer may still want to understand whether the community as a whole is financially healthy.

5. Conflicts between neighbours

Minutes can sometimes reveal disputes about noise, use of common areas, illegal works, water leaks, tourist rentals or other recurring problems.

This does not always mean the property should not be purchased, but it is information the buyer should have before committing.

6. Pending legal proceedings

The community may be involved in legal proceedings against a developer, contractor, neighbour, debtor or public authority. This may have financial or practical consequences for the owners.

Should the buyer always ask for the latest minutes?

In our view, yes, especially when buying an apartment, townhouse, property in an urbanisation, property with communal facilities, or any property subject to a community of owners.

The latest minutes are not the only document to review, but they are an important part of legal due diligence.

Ideally, a buyer should ask for:

  • the latest minutes of the owners’ meeting;
  • the community statutes, if any;
  • the internal rules, if any;
  • the certificate confirming the seller is up to date with community fees;
  • information about approved or foreseeable special contributions;
  • the latest community budget;
  • confirmation of the ordinary community fees.

What if there are no recent minutes?

If there are no recent minutes, this should also be noted. It may simply mean that the community is small or inactive, but it may also indicate poor administration.

In that case, it is advisable to ask further questions:

  • When was the last owners’ meeting held?
  • Who is the president of the community?
  • Is there a professional administrator?
  • Are there pending repairs or debts?
  • Are there any agreed but unpaid expenses?
  • Are any special contributions expected?

Why this matters for foreign buyers

Foreign buyers often rely heavily on the estate agent, the seller or a general impression of the property. However, in Spain, the community of owners can have a direct impact on the buyer’s future costs, rights and use of the property.

A careful review of the latest minutes can help identify risks before signing the purchase contract or completing before notary.

It may also allow the buyer to renegotiate, request further documentation or make an informed decision before committing.

Conclusion

When buying property in Spain, legal due diligence should not stop at the title deed and the land registry search.

The latest minutes of the owners’ meeting can reveal essential information about the building, future expenses, community decisions, disputes and potential risks.

At Bennet & Rey, we assist international buyers with the legal review of property purchases in Spain, helping them understand not only what they are buying, but also the obligations and risks that may come with it.

If you are buying property in Spain and would like legal assistance before signing, we would be pleased to help.

Send us an email: [email protected]

Click here and book a meeting with a lawyer