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sunspot
02-06-2011, 22:51
By forming a UK Company: The owner of the property forms a UK Limited Liability company, in which ownership of the property passes into the hands of the company. In this way when he or she passes away, the company will be reorganised, that means it will only be necessary to transfer some company shares, which falls outside Spanish inheritance tax.

By transferring ownership of the property from you (your personal name) into a United Kingdom Limited company.
From the point of transfer the company owns the asset.

But;

As the legal company owner, you remain in full control of the company - and therefore the asset.


You do not relinquish any control or decision making power regarding the property.
You stay in absolute control of the shares of that company, and you have the final say in who owns those shares.

Therefore - Inheritance tax never becomes an issue. Because on your passing, the company still remains the owner of the asset, it's just the shares in the company that will change hands when the time comes.

It's simple, isn't it?

And it's totally legal too!

copied from owner direct (http://www.winchamiht.com/index.html)

bonitatime
02-06-2011, 22:53
Don't you have to pay Plus Valia on the transfer?

doreen
02-06-2011, 23:00
I really think it is a lot more complicated than that

Read this http://belegal.com/blog-by-antonio-flores/spanish-inheritance-tax-don%E2%80%99ts-2-seeking-exemption-by-incorporation-of-uk-companies/

Where's our Norme :)

sunspot
02-06-2011, 23:02
Don't you have to pay Plus Valia on the transfer?

Between 7-14%, inheritance tax is 40-80%, its not just to save money for your kids, it could be your wife or husband and they
could even have thier bank account frozen untill the inheritance tax is sorted

doreen
02-06-2011, 23:05
Em ... hello ... listen to a Spanish lawyer

1. Law does not support the abuse or the anti-social use of it (Article 7 of the Spanish Civil Code).This old and basic, yet crucial, legal precept is being invoked by the Spanish Prosecutor in large fraud cases involving offshore companies, and Judges are upholding it, where they are used to evade payment of taxes.

2. Resident tax payers will be obligated to pay taxes on goods and rights received by way of inheritance or gift, wherever these are situated. This would include foreign companies (Article 17 of Rd 1629/1991 Inheritance and Gift Tax Royal Decree). In addition, Article 18 stipulates that anyone not included in article 17 will have to pay taxes on goods and rights, of any nature, that were situated, were susceptible of being exercised or should be carried out in Spanish territory. Article 17.2 specifically stipulates that the following will be deemed as situated in Spanish territory: Real Estate.

3. Capital Gain Taxes obtained, directly or indirectly, from property situated in Spain, will be taxed in Spain (Non-Resident Act 5/2004). In particular, the following gains are included: when they are originated or derived from rights or shares of a company, resident or not, whose assets are made of up of, primarily, directly or indirectly, property based in Spain. The gains obtained from transferring the shares of a company, resident or otherwise, that attribute its ultimate owners, the right of enjoyment of Spain. By extension, we can easily conclude that property changing hands via a UK Company would be taxed in Spain, and not abroad, unless the Spanish legislators envisaged 2 different tax treatments for what is essentially the same thing, transferring property through transfer of shares.

4. Liability of the people involved with companies deemed fraudulent by the Tax Office. (article 43 of the Ley 58/2003 General Tributaria): Point g) refers to the liability of persons or entities that have the effective control, total or partial, direct or indirect, of the juridical persons (companies) or in which there is a shared or joint decision making process, when it is verified that the juridical persons have been created or utilized in an abusive or fraudulent manner with the purpose of eluding the patrimonial universal responsibility in respect of the Tax Office, and there is a uniqueness of people and economical or financial spheres, or confusion or diversion of assets. Point h) refers to the liability of the persons and entities of which the tax payer is in control of, partially or totally, directly or indirectly, for the tax obligations of the taxpayer, when it is verified that the juridical persons have been created or utilized in an abusive or fraudulent manner with the purpose of eluding the patrimonial universal responsibility in respect of the Tax Office, and there is a uniqueness of people and economical or financial spheres, or confusion or diversion of assets Although both scenarios seem similar they are quite distinct since one refers to the people in charge of the companies that are used to defraud, and the other the companies that are under the control of the defrauding taxpayer.Note that these 2 points have been enacted, and added to the previous law, by virtue of the more recent 2006 Act on Prevention of Tax Fraud (Ley 36/2006, de 29 de noviembre, de medidas para la prevención del fraude fiscal). All of which sounds too symptomatic of a specific intent to curtail tax evasion by using companies.

5. Using companies for a purpose other than trading. There is abundant Supreme Court case law, but, in essence and for the sake of brevity, what the Supreme Court is against is the utilization of companies for the purpose of achieving a result distinct from the normal and genuine purpose of incorporating one, which is to trade. There are references to the fraudulent use and abuse of companies in many instances, the artificial creation of juridical entities or the mere appearance to obtain a result contrary to law, fictitious entity, inconsistency of juridical person, instrumentation, mere formal juridical personality, confusion of personalities, substantial confusion and identity etc. If we put our Joe Bloggs hat on, what would we think if one someone transferred his property into a company and next day sold it? Indeed, it would strike us as rather hanky-panky.

http://belegal.com/blog-by-antonio-flores/spanish-inheritance-tax-don%E2%80%99ts-2-seeking-exemption-by-incorporation-of-uk-companies/

Norm de Plume
03-06-2011, 10:56
I'm here Doreen. Having considered it for myself, it seems to me that there are really no advantages in pursuing the limited company route for those who already own a property. The costs of setting up the company and of transfer would offset any benefit.
For those acquiring a property for the first time there may be benefits, but the general outline of the scheme seems (not surprisingly) to be regarded as unlawful by the authorities as being tax evasion rather than tax avoidance. A Spanish lawyer has, I believe, already been sent to prison for fraud for setting up such a scheme. I think the best course is to leave well alone. Furthermore, as a result of my representations to Brussels, the Spanish Government has been told to get its house in order on the discrimination in inheritance taxes between non-resident owners and residents, although nothing appears to have happened as yet. However time is running out for them.

doreen
03-06-2011, 20:21
I'm here Doreen. Having considered it for myself, it seems to me that there are really no advantages in pursuing the limited company route for those who already own a property. The costs of setting up the company and of transfer would offset any benefit.
For those acquiring a property for the first time there may be benefits, but the general outline of the scheme seems (not surprisingly) to be regarded as unlawful by the authorities as being tax evasion rather than tax avoidance. A Spanish lawyer has, I believe, already been sent to prison for fraud for setting up such a scheme. I think the best course is to leave well alone. Furthermore, as a result of my representations to Brussels, the Spanish Government has been told to get its house in order on the discrimination in inheritance taxes between non-resident owners and residents, although nothing appears to have happened as yet. However time is running out for them.

Thanks Norme ... I know this is your area of expertise ... I guess many of the advisors in the companies advocating such schemes are salesman, not lawyers

delderek
03-06-2011, 21:57
It all sounds very good, but accounts will have to be submitted each year for inland revenue and companies house, and accountants fees are not cheap, and if you want to remove that asset from the company in the future, see how the Tax man treats that.

atlantico
03-06-2011, 22:03
I started a thread on the .com site regarding this, and after many pages of discussions, it was decided that setting up a UK Ltd Company to avoid taxes and inheritance taxes etc, . . . . . . . . . was a waste of time and money unless you had many properties which were indeed part of a genuine business. There are also many hidden on-going costs which make the gains look insignificant !

CIM
04-06-2011, 01:24
A total waste of time indeed. However, slick sales pages and pages and pages of fantastic reasons why you should **** away your money putting your property into a UK limited company will unfortunately convince many poor souls to do so.

This "scheme" has been torn to pieces on many forums with no adequate response from those who run this company yet they continue to use paid Google adsense ads to promote their "products." If this "scheme" worked there would by now be a multitude of companies all providing this "too good to be true" service.

My advice, along with many others who have looked at this in detail: Steer clear

Peterrayner
04-06-2011, 08:13
I'm here Doreen. Having considered it for myself, it seems to me that there are really no advantages in pursuing the limited company route for those who already own a property. The costs of setting up the company and of transfer would offset any benefit.
For those acquiring a property for the first time there may be benefits, but the general outline of the scheme seems (not surprisingly) to be regarded as unlawful by the authorities as being tax evasion rather than tax avoidance. A Spanish lawyer has, I believe, already been sent to prison for fraud for setting up such a scheme. I think the best course is to leave well alone. Furthermore, as a result of my representations to Brussels, the Spanish Government has been told to get its house in order on the discrimination in inheritance taxes between non-resident owners and residents, although nothing appears to have happened as yet. However time is running out for them.

@ Doreen Nome de Plume

Thanks for that valuable imput. Nome would it be possible to keep us updated on any progress with the EU actions against this discrimination on non residents. :)

Norm de Plume
04-06-2011, 10:49
Will let you know when I know anything. Unfortunately I do not have a private line to Brussels and have to find out the same way as everybody else. Only occasionally do they let me know anything in advance.