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.

 

[DarkRevoMan]

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)?

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

For tax you can have the 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 the company behind a trust for added asset protection.

 

[atitov]

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

For tax you can have the 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 the company behind a trust for added asset protection.

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

and what do you recommend about third question?

 

[atitov]

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

For tax you can have the 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 the company behind a trust for added asset protection.

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

 

[loccu]

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

For tax you can have the 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 the company behind a trust for added asset protection.

Hi! How could i contact you?

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

My telegram is written on my profile.

 

[Mike Forman]

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

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 to the corporation, which has to be at arms length.

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

 

[FDS ADS]

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)?

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

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

 

[atitov]

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

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

Why you suggest Gibraltar and why not local Spain company?

 

[FDS ADS]

Why you suggest Gibraltar and why not local Spain company?

You will avoid taxes legally.

 

[Sols]

You will avoid taxes legally.

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]

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

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]

Hi! How could i contact you?

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

My telegram is written on my profile.

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]

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.

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

 

[Sols]

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.

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 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.

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

 

[FDS ADS]

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

You need to pay personal taxes.

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.

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.