Company status for foreign letting business?

A client has a single villa that they let out in Spain, and was questioning the company type.

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A client has a villa in Spain for which a Spanish accountant completes the form 210 for non resident income tax.  They also declare the income on a UK self assessment and claim foreign tax credit relief as a furnished holiday let.  A friend of theirs has suggested that they should be set up as a company in Spain in order to be able to allow for more deductions and reduce tax.  However, this does not seem to be the right approach for two reasons i)  they have their life earnings invested in the villa so it would seem more sensible to keep it in their own names rather than a company which would be a separate legal entity to themselves, ii)  when they declare it on their UK self assessment most costs are deductuble for tax purposes anyway and the foreign tax is claimed back.  I would appreciate peoples' thoughts.

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By WhichTyler
10th Jul 2017 12:55

I last looked at this a while ago, so please re-check in case legislation has changed. If they own the property personally, they may be subject to Spanish inheritance tax (an probate procedures, admin etc. etc.). It may be worth having the property owned by a UK company, so that the ownership of the property doesn't change on death, just the ownership of the shares. Do they have a spanish will?

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10th Jul 2017 14:55

Yes, they do have a Spanish will as well as an English one.

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