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Note on Taxation of the use of the property by the non-resident company partner in Spain

Note on Taxation of the use of the property by the non-resident company partner in Spain


In recent years, it is observed that more and more foreign clients that own companies in their respective countries are considering the purchase of a property in Spain through these companies NON RESIDENTS in Spain, especially since the money to invest is in the accounts of these societies.

If this is done, it is evident that the dwelling will be occupied by the administrator-partner of said foreign company, regardless of whether or not there is a lease contract and that is why it is necessary to clarify the tax treatment of this assignment of the property from the non-resident foreign company in favor of a non-resident member and / or director.

Already in the query V2147-17, of August 21, 2017, the General Directorate of Taxes exposed the treatment that should be given to the use (free of charge) made by a natural person NON RESIDENT of the property located in Spain, whose ownership is of an entity (in this case, also NON-RESIDENT) of which this is a shareholder.

In the first place, the DGT understands that the cession of goods made in favor of the partner must be understood as remunerated (articles 12 and 13 of the TR) and, consequently, the NON-RESIDENT company must be imputed a (presumed) income, obtained in Spanish territory, and subject to taxation, which must be valued by applying the rules that the Corporation Tax Law contains for the purposes of related operations.

Secondly, the DGT determines the taxation of this assignment in the seat of the partner, a non-resident individual, and distinguishes three cases:

1) If the partner is also an director, such income could only be subject to taxation in the country of residence of the entity (not in Spain), Article 16 of the Agreement;

2) If the partner maintains a professional relationship with the entity and does not have an EP in Spain, this income will not be subject to taxation in Spanish territory (Articles 7 and / or 14 of the Agreement);

3) If it is not appropriate to apply any of the above assumptions, this income will be classified as a utility derived from the status of partner, to which Article 10 of the Agreement will apply and the same conclusion is reached: this income can not be subject to to taxation in Spain.

Finally, the tax rate will generally be 24% and 19% for non-residents in the EU or the European Economic Area. (EEA).


Javier Blas
Lawyer Illeslex

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