Buying a Spanish home through a company: what it costs every year and what it changes on the way out

A couple from Hamburg have found an apartment in Corralejo for 300,000 euros, and somebody has told them to buy it through a Spanish limited company, an SL, because a company pays less tax. Before the notary, the idea deserves numbers. For a home its owners will use themselves, Spanish tax law treats the company as a landlord and the owners as its tenants: it expects a market rent every year, it taxes the company at the full corporate rate, and when the home is sold it taxes the gain twice, once in the company and once on the way back to the shareholders. This guide goes through what such a company is for the tax office, what the same apartment costs each year under each owner, the way out, wealth tax, the purchase taxes and the special levy on companies from certain territories. Quotations are in Spanish with the reading in English.

What the tax office sees: a company that only holds a home

A company whose main asset is a house that its owners use is not a business in the eyes of the Corporate Income Tax Act. It is what the Act calls an entidad patrimonial, an asset-holding entity: aquella en la que más de la mitad de su activo esté constituido por valores o no esté afecto, en los términos del apartado anterior, a una actividad económica, one in which more than half of the assets are securities or are not used in an economic activity (Ley 27/2014, article 5.2).

Letting does not change that by itself. Renting out property counts as an economic activity únicamente cuando para su ordenación se utilice, al menos, una persona empleada con contrato laboral y jornada completa, only when at least one person employed under a contract and working full time is used to run it (article 5.1). A company with one apartment and no employee is on the wrong side of that line, and the first consequence is the rate. It pays the general 25 per cent, because the lower rates that the Act gives to small and new companies no resultarán de aplicación a aquellas entidades que tengan la consideración de entidad patrimonial, do not apply to entities that are asset-holding entities (article 29.1).

Living in the company's house: the market-rent rule

The second consequence is the one buyers do not expect. A company and its shareholders are related parties, and so are its directors and the shareholders' close relatives; for shareholders the Act asks for a stake of at least 25 per cent (article 18.2). Between related parties the rule is one sentence: Las operaciones efectuadas entre personas o entidades vinculadas se valorarán por su valor de mercado, transactions between related persons or entities are valued at their market value (article 18.1). The Personal Income Tax Act says the same from the shareholder's side (Ley 35/2006, article 41). The company cannot lend its only asset to its owners for nothing. Either it lets them the house at the rent a stranger would pay, and declares that rent, or the tax office does the valuation itself.

When the tax office does it, the bill has two halves. The company is taxed on the rent it should have charged. And the difference in the shareholder's favour, in proportion to his stake, se considerará como retribución de fondos propios para la entidad y como participación en beneficios para el socio, is treated as a return on equity for the company and as a share in profits for the shareholder (article 18.11): a dividend he never saw in cash, and taxed as one, unless he then pays the company what he should have paid, which the same article allows.

There is one more detail in the Canaries. The letting of a building used exclusively as a dwelling is exempt from IGIC (Decreto Legislativo 1/2025 of the Canary Islands, article 21), so the company adds no IGIC to that rent, and the exemption has a price. Input tax can be deducted only en la medida en que dichos bienes o servicios se utilicen en la realización de las operaciones sujetas y no exentas al Impuesto, to the extent that the goods or services are used in transactions that are subject to the tax and not exempt (Ley 20/1991, article 28.1). The IGIC paid on a new-build bought to house the shareholders stays a cost.

A company does not turn a home into a business. It turns its owners into tenants.

What the company adds to every year

A company is also a calendar, and it runs whether or not anyone visits the house.

• Accounts. The directors draw them up within three months of the year-end, the shareholders approve them within six, and they are filed at the Registro Mercantil within the month after approval (Ley de Sociedades de Capital, articles 253, 164 and 279).
• The price of not filing. While the accounts are missing, the law orders that, with few exceptions, no se inscriba en el Registro Mercantil documento alguno referido a la sociedad mientras el incumplimiento persista, no document concerning the company be entered in the Registro Mercantil while the breach lasts (article 282), and the company faces a fine of 1,200 to 60,000 euros (article 283).
• Books. The accounting books and the minute book are legalised online at the same registry within four months of the year-end (Ley 14/2013, article 18).
• Corporate income tax. The return is filed within the 25 calendar days that follow the six months after the year-end, which for a company that closes with the calendar year means from 1 to 25 July (Ley 27/2014, article 124).
• The lease. A written contract, a rent backed by evidence of what similar homes fetch, and the receipts: the Act asks related parties to be able to show that their dealings were at market value (article 18.3), and this is how a small company does it.

The same apartment under two owners

Take the Corralejo apartment: a price of 300,000 euros, a cadastral value of 100,000 and a market rent of 1,200 euros a month, which is 14,400 a year. The buyers live in Germany and use it themselves. The figures are invented to show the method.

Owned in their own names, the apartment produces no rent, and Spain taxes a notional one: 2 per cent of the cadastral value, or 1.1 per cent where the municipality's values were revised in the last ten tax periods (Ley 35/2006, article 85, applied to non-residents by article 24.5 of the Non-Resident Income Tax Act; the scale that Real Decreto-ley 26/2026 announced for 2027 fell with its repeal on 2 October). That is 2,000 or 1,100 euros of income, taxed at 19 per cent for residents of the European Union or the European Economic Area and at 24 per cent for the rest (article 25.1): 380 or 209 euros a year for this couple. The return is the one described in our note on what a non-resident's home costs every year.

Owned by an SL, the same year looks different. The company lets the apartment to its shareholders for 14,400 euros. Suppose its deductible costs come to 9,400 euros: the depreciation of the building, at the maximum of 2 per cent a year that the Act's table allows for dwellings (article 12), the property tax, the community fees, the insurance and the accounts. It is left with a profit of 5,000 euros and pays 25 per cent of it, 1,250 euros. What remains after its costs and its tax is the company's money, not the owners'. Paid out as a dividend, it costs a non-resident another 19 per cent in Spain, before any tax treaty (article 25.1 of the Non-Resident Act), and costs a resident the savings scale, which runs from 19 to 30 per cent (Ley 35/2006, articles 66 and 76).

And if the company charges nothing? The valuation of the previous section applies. The company is still taxed as if it had charged 14,400 euros, which is 1,250 euros on these figures, and the shareholders are treated as having received as a dividend the rent they did not pay: 14,400 euros between the two, and 2,736 euros of tax at 19 per cent.

The way out

Selling is where the two routes part for good. Suppose the apartment is sold with a gain of 100,000 euros.

• Owned directly. A non-resident pays 19 per cent of the gain, 19,000 euros (article 25.1 of the Non-Resident Act), and the buyer withholds 3 per cent of the price on account, the subject of our note on how the 3 per cent retention comes back. A resident pays the savings scale and has two exits that a company never has: the gain on a main home is left out of tax when the whole price is reinvested in another main home, and those over 65 pay nothing on the sale of theirs (Ley 35/2006, articles 38 and 33.4).
• Sold by the company. The SL pays 25 per cent of its gain, 25,000 euros, and in practice its gain is larger than the owners', because every year of depreciation lowered the value in its books. Paying out the 75,000 euros that remain costs a non-resident another 19 per cent, 14,250 euros. That is 39,250 euros in all, more than twice the direct route.
• Selling the shares instead. For a non-resident the gain on the shares is taxed in Spain like the gain on the house: the Act reaches gains on shares in an entity cuyo activo esté constituido principalmente, de forma directa o indirecta, por bienes inmuebles situados en territorio español, whose assets consist mainly, directly or indirectly, of real estate located in Spain, and withdraws for them the exemption that European residents otherwise have on shares (articles 13.1 and 14.1); a tax treaty can say otherwise, and has to be read. The buyer has a problem of his own. Share sales are normally free of transfer tax, but when someone takes control of a company with at least half of its assets in Spanish property that is not used in a business, they are sales que tributarán en el impuesto al que estén sujetas como transmisiones onerosas de bienes inmuebles, taxed under the tax they are subject to as transfers of real estate for value, unless the buyer proves that no tax was being avoided (Ley 6/2023, article 338). In the Canaries that means the 6.5 per cent of a resale, plus a company with a history to inherit. Few buyers want it, and those who do ask for a discount.

Wealth tax: the shares count as the house

Holding the home through a company does not take it out of Spanish wealth tax. Since 29 December 2022 the Wealth Tax Act treats as located in Spain, and therefore taxable in the hands of a non-resident, the shares of any entity that are no negociados en mercados organizados, cuyo activo esté constituido en al menos el 50 por ciento, de forma directa o indirecta, por bienes inmuebles situados en territorio español, not traded on organised markets, where at least 50 per cent of the entity's assets consist, directly or indirectly, of real estate located in Spain (Ley 19/1991, article 5).

Unlisted shares are valued at the book value of the last approved balance sheet if it has been audited with a favourable report, and otherwise at the highest of three figures: the nominal value, that book value, or the average profit of the last three years capitalised at 20 per cent (article 16). A house held directly counts at the highest of its cadastral value, the value checked by the administration for other taxes or its price (article 10). Either way the first 700,000 euros of each taxpayer are free (article 28, which extends the allowance to non-residents; for residents of the Canaries, article 29 of the regional Decreto Legislativo 1/2009). The exemption for shares in family businesses does not help, because it requires that the entity no tenga por actividad principal la gestión de un patrimonio mobiliario o inmobiliario, does not have as its main activity the management of movable or immovable assets (article 4).

Buying: the same taxes, and one door closed

At the purchase the company saves nothing. A resale pays transfer tax at the general 6.5 per cent in the Canaries whoever buys. The reduced 5 per cent rate is for the buyer's main home, and where there are several buyers the regional law adds that todos deben ser personas físicas, all of them must be individuals (Decreto Legislativo 1/2009, article 31). A new-build pays IGIC instead, with stamp duty at 1 per cent (article 36), and for a company whose only income is an exempt rent that IGIC is not recoverable, as explained above. The rates, the tracks and the reliefs are set out in our note on the taxes on buying a home in Fuerteventura.

A company from abroad: the 3 per cent levy

Some buyers arrive with a company they already have. If it is resident in one of the territories that Spain lists as non-cooperative jurisdictions, the Non-Resident Income Tax Act charges a special levy on the property it owns here, every year, on the cadastral value (articles 40 and 41): El tipo del gravamen especial será del 3 por ciento, the rate of the special levy is 3 per cent (article 43). It se devengará a 31 de diciembre de cada año y deberá declararse e ingresarse en el mes de enero siguiente al devengo, accrues on 31 December of each year and must be declared and paid in the following January (article 45), and an unpaid levy can be collected against the property itself. On the Corralejo apartment that is 3,000 euros a year.

The list in force is the one in Orden HFP/115/2023 as amended by Orden HAC/649/2026. Jersey, Guernsey, the Isle of Man, Bermuda, the Cayman Islands and the British Virgin Islands are on it, among others. Gibraltar, Barbados and the Seychelles were taken off by the order published on 27 June 2026, which carries a transitional rule for tax periods already running, so a company from one of those three should have the levy due in January 2027 checked rather than assumed. Companies that carry on in Spain a business distinguishable from simply holding or letting the property, and listed companies, are exempt (article 42).

When a company does make sense

None of this is an argument against companies. It is an argument about one case, a home for the owners' own use. A company that lets several properties to third parties with at least one full-time employee carries on an economic activity under the article quoted at the start, and the picture changes: it is no longer an asset-holding entity, and the lower rates for small companies become available. Several investors who are not family, or a purchase that is the first step of a business, are other reasons. That decision belongs with the choice of legal form, which our note on autónomo or SL walks through.

What our advisers do

Our tax advisers in Caleta de Fuste and Costa Calma map what each route would owe before the purchase is signed, and prepare the income and corporate tax returns that follow from the one chosen. We represent clients before both tax agencies when a query or a requirement arrives. The service is described on the tax advisory page, and a first meeting can be booked online.

Common questions

Does a company make the yearly tax on a holiday home disappear?

No. The notional income that an individual declares is replaced by the market rent the company must charge, taxed at 25 per cent after its costs, and by the company's own yearly obligations. On the figures of this guide, 380 or 209 euros become 1,250.

We are the only shareholders. Do we really have to pay rent to our own company?

Yes. A company and its shareholders are related parties, and their dealings are valued at market value. If no rent is charged, the tax office adds it to the company's income and treats it as a dividend in your hands.

Is selling the shares cheaper than selling the house?

Not for the seller: a non-resident's gain on shares in a company whose assets are mainly Spanish property is taxed in Spain at the same 19 per cent. And the buyer who takes control normally pays transfer tax as if he had bought the property.

Does holding the home through a company avoid Spanish wealth tax for a non-resident?

Not since 29 December 2022. Unlisted shares in an entity with at least 50 per cent of its assets in Spanish real estate are treated as located in Spain, with the same allowance of 700,000 euros for each taxpayer.

Our company is registered in Jersey. Does the 3 per cent levy apply?

Jersey is on the list in force, so a Jersey company that owns a home here owes 3 per cent of its cadastral value each year, declared and paid in January, unless it carries on a real business in Spain or is listed.

Facts verified in October 2026 (Ley 27/2014, articles 5, 12, 18, 29 and 124; Ley 35/2006, articles 33, 38, 41, 66, 76 and 85; the Non-Resident Income Tax Act, Real Decreto Legislativo 5/2004, articles 13, 14, 24, 25 and 40 to 45; Ley 19/1991, articles 4, 5, 10, 16 and 28; Ley 20/1991, article 28; the Canary Islands' Decreto Legislativo 1/2025, article 21, and Decreto Legislativo 1/2009, articles 29, 31 and 36; Ley de Sociedades de Capital, articles 164, 253, 279, 282 and 283; Ley 14/2013, article 18; Ley 6/2023, article 338; Orden HFP/115/2023 as amended by Orden HAC/649/2026, all as they read on 4 October 2026). The figures of the example are invented to show the method; this note is general information, not advice on a particular purchase.