Real estate investment in Spain. Special tax regime for companies buying to let

MANY of the investors in real estate properties in Spain do not do so with the intention of buying the properties to sell quickly, but invest with the intention of renting out their properties long term.

The reasons for this are many; some do it, in order to take advantage of the low property prices when compared to the years before the real estate crisis and because rents in Spain, especially in some cities, can be very high.

Another influence is the fact that banks do not pay significant interest on deposits or savings and many investors want to put their money to work meaning that they buy properties in Spain and rent them, thus obtaining a return for their funds which they cannot get from banks, and this is without taking significant risks.

Although there are a number of ways to invest in Spain, the truth is that many of these investors are unaware of the existence of a special tax regime for those companies whose activity is property leasing. This special regime is included in articles 48 and following ones of the Corporate Tax Law (Law 27/2014).

This special law states

It is applicable to companies whose main activity is the lease of homes located in Spain, (that is, the letting contract must have as its main objective to constitute the permanent home of the tenant) and It would not be applicable therefore for companies that want to rent out properties for holiday lets.

Number of dwellings: the number of dwellings leased or offered for lease by the companies must always be at least eight.

Term; the properties must be leased or offered for a minimum three years.

Accounting and communication: each property must have separate accounting and holding companies must report to the Tax Administration that they have opted to be included in this special regime.

Tax benefits: companies will have a tax benefit of 85 per cent of the amount corresponding to the income raised from the lease of properties that meet the requirements stated above.

Therefore, if you are an investor and want to invest in Spain in real estate properties with the objective of renting them as habitual or permanent homes, be aware that fiscally there is the option of purchasing the real estate through a company, which providing that it complies with the requirements indicated, may opt for the special regime of entities dedicated to home leasing, which is provided in Chapter III, of the Corporation Tax Law, with significant tax benefits.

You should know that if you already have several properties in your own name as an individual and you are interested in transferring them to a company, for example, to be able to enjoy this regime or for any other reason, know that it is possible to do so, with a lower cost than a normal sale or property transfer.

Therefore, if you want to invest in property, the best way to do it is to set up a company in Spain, or transfer your properties into a company, contact us and we will help you.

The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.


Carlos Baos (Lawyer)

White & Baos

Tel:+34 966 426 185


White & Baos 2018 – All rights reserved