Company structure for real estate investments

[atitov]

Hello, I have plans to start investing in real estate market in Spain for renting properties out. So I have three questions about company structures that would work perfect for me, post in one thread for the whole picture here

1) am I undestand right, that its better to have local company to own properties and get payments to local bank from tenants + have an offshore HQ company that owns 100% of that spain-based company, and transfer money to offshore? or am I wrong?
2) If im right in first question, what offshore jurisdiction you would recommend for this type of structure/investments
3) Is it ok to transfer money times to times from my entrepreneurial account in Georgia to Spain based company bank account (or maybe HQ bank account?) for buying more properties (via mortgage)?

 

[JustAnotherNomad]

Why would you want that? Rental income is always taxed where the property is located,‌ and then potentially also where you live.
You can't avoid tax just by using an‍ offshore company - except for estate tax maybe, in some cases.
It can also be⁠ harder or more expensive to get a mortgage if a company owns the property.

 

[atitov]

Im not EU resident, so I think its easier with company
In Spain, there is‌ a law that if you have more than 4 properties you getting restrictions and so‍ on, so I think its easier to have few local companies (not now, but later,⁠ for sure) with 4 properties each to avoid it.

 

[JohnnyDoe]

Being that your goal, you should be fine with US LLCs.

Toggle signature

@JohnnyDoe ”“ Your #1 Source for Guidance in Different Offshore Fields​

 

[DarkRevoMan]

On shore - offshore hybrid structure for this. Local︃ company to own the property, then an offshore company can either hold the mortgage or︄ a secondary lien against the property (if there is more owed than what the property︅ is worth there is no point seizing the asset).

For tax you can have the︆ onshore company pay interest or services to an offshore firm (loans, or management fees, etc).︇

Look up: friendly liens, equity stripping, onshore offshore hybrid structures

You could also put the︈ company behind a trust for added asset protection.

 

[atitov]

So offshore company should own onshore, right? or︀ it should be independent companies?

and what do you recommend about third question?

 

[atitov]

Ok, looks like I figured out:
I transfer︀ money to offshore company, loan this money to onshore company to buy a property, then︁ when I have money from renting out the property onshore company pay loan back to︂ offshore company, right? so there is no profit for onshore company to pay taxes

 

[loccu]

Hi! How could i contact you?

Im in︀ need for some knowledge that u may have experience of. Willing to pay for your︁ time. Much appreceation.

My telegram is written on my profile.

 

[Mike Forman]

How do you⁤ come to this conclusion?
Taxation on profit has nothing related to loan, before making investments⁣ I would recommend to understand the basics of corporate tax and accounting.

The only thing⁢ you can deduct from your income profit is the interest rate you will charge to︀ the corporation, which has to be at arms length.

If an offshore structure is the︁ shareholder and make an investment same principle. Pay out dividends to the shareholder will be︂ after profits are taxed and depending on the constructions another dividend tax

 

[FDS ADS]

I think you need qualified consulting and your model︃ needs deeper understanding.

In general, I am advising you to incorporate a company in Gibraltar︄ and conduct your business activity in Spain with your Gibraltar company.

 

[atitov]

Why you suggest Gibraltar⁠ and why not local Spain company?

 

[FDS ADS]

You will avoid taxes legally.

 

[Sols]

Please tell us how‌ to conduct the business activities of a company incorporated in Gibraltar while resident in Spain‍ and "avoid taxes legally".

 

[FDS ADS]

Here is‍ the difference between personal and corporate taxes, even if you are a tax resident in⁠ Spain and doing business without economic substance in Spain from 0% Tax Jurisdiction then your⁤ company is exempted from taxes and is only subject to VAT in Spain if a⁣ certain threshold is reached.

 

[icecold]

You may post your question in this⁠ thread. I'm also interested in this setup so every input I could rad about I⁤ would like to read here.

 

[CyprusLaw]

You would still⁤ have to pay taxes in Spain at a personal level though, or am I missing⁣ something?

 

[Sols]

The Gibraltar company⁤ is tax resident in Spain because the entity's business activities are conducted from Spain in⁣ your example. That means it's taxable in Spain.

 

[atitov]

You can post your knowledge here as well so we all become more‍ educated 🙂

 

[FDS ADS]

You need to pay personal taxes.‍

No matter where business activity is conducted, essential is economic substance which means a⁣ certain level of financial connection between company management and exact jurisdiction.

 

[Hephaestus]

Hi, interesting topic, what would be your suggestion for a EU citizen "real estate fund"‌ holding company, as I want to use leverage which needs local company for a corporate‍ loan. I want to buy 2 residential properties in Austria (those without VAT), 1 in⁠ Hungary, 1 in Spain and my goal is asset protection e.g. if 1 of them⁤ goes wrong (liability), I don't want to loose also the other 3. We are below⁣ 1M and managed by managing property company (AirBnB, long-term rent) so shouldn't be very expensive⁢ as this is only some diversification with < 3% guaranteed net returns for 20 years.︀