Non-residents owning property in Tenerife through a company

[Balcony]

Has anyone any direct experience of a non-resident owning a residential property in TENERIFE where ownership is vested in a company, either registered locally, or in some other country?

This was a popular way of owning property on the mainland, for example, La Manga where ownership was with a company registered in Gibralter.

[CIM]

I have plenty of experience in this having arranged mortgages for this type of structure
Unfortunately this type of ownership has been exploited as a tax loophole and is promoted by various companies as an inheritance tax dodge as well as claims that no tax is payable upon selling (you sell the shares etc.)

The Hacienda are well aware of such schemes (as are UK tax authorities) and by and large you risk high setup costs, ongoing costs and costs for winding up the company later for little chance of avoiding any tax.

In this case of IHT mitigation, you are planning for events that will hopefully occur decades into the future at which point if any loopholes are still working they will undoubtedly have been closed by then as tax laws are continually reviewed and updated. You will also have both tax authorities from both countries investigating in detail this structure at the point of inheritance.

If you intend on buying multiple properties and managing them on a commercial basis (for long lets, short lets, or buying and selling for profit) then this can be a useful option. Or if you are an international buyer and want to keep your ownership confidential then an offshore company can be utilised but that's pretty much where the usefulness ends.

[Balcony]

Was thinking if it was effective way to avoid Capital Gains Tax and/or Plus Valia!

[delderek]

Possibly is but, remember you will have to submit accounts in the country the company is formed in,,,accountants fees, company reg renewal, etc, etc, this could cost you a minimum in the UK of around three grand a year, so as CIM says, multiple apartments could be beneficial, one apartment, no way.