Owned property but pay any tax

[AbbieNormal]

Hi maybe someone could help

I want to set up a offshore company as a registered owner of a property. If theres any property tax or any earnings I do want to pay that, just not in my own tax jurisdiction, hence I don't want tax avoidance just confidentiality.
What would be a good option and how to go about that or who could one ask to advise about that.

Alternatively I could just never rent it out and have no income from it, but I am still wary about falling foul of anything. Any suggestions ?

Thanks, AB

 

[JohnnyDoe]

Hi maybe someone could help

I want to set up a offshore company as a registered owner of a property. If theres any property tax or any earnings I do want to pay that, just not in my own tax jurisdiction, hence I don't want tax avoidance just confidentiality.
What would be a good option and how to go about that or who could one ask to advise about that.

Alternatively I could just never rent it out and have no income from it, but I am still wary about falling foul of anything. Any suggestions ?

Thanks, AB

Any property tax must be paid in the country where the property is located, no exceptions.

 

[Martin Everson]

want to set up a offshore company as a registered owner of a property. If theres any property tax or any earnings I do want to pay that, just not in my own tax jurisdiction, hence I don't want tax avoidance just confidentiality.
What would be a good option and how to go about that or who could one ask to advise about that.

Which country are you buying property in firstly? Where will the offshore company be based? All countries have different rules and different types of property taxes. Some forms of taxes related to property can be legally avoided using an offshore anyway. I can give you example.

Alternatively I could just never rent it out and have no income from it, but I am still wary about falling foul of anything. Any suggestions ?

Rental income is only one type of tax. There are many more when talking about property depending on country.

Any property tax must be paid in the country where the property is located, no exceptions.

This is simple not true. I can give example in Europe where the Double Taxation Agreement (DTA) allows one to avoid some taxes in country where property is owned via on offshore company.

 

[JohnnyDoe]

This is simple not true. I can give example in Europe where the Double Taxation Agreement (DTA) allows one to avoid some taxes in country where property is owned via on offshore company.

I am talking about local property taxes, such as ownership, garbage etc. not taxes on rent or else.

 

[Martin Everson]

I am talking about local property taxes, such as ownership, garbage etc. not taxes on rent or else.

I am talking a local tax also for owning the property that can be avoided and legally.

 

[JohnnyDoe]

I am talking a local tax also for owning the property that can be avoided and legally.

Explain how

 

[Martin Everson]

Explain how

Sure,

For example lets say you want to buy the below 10.8m euro holiday Villa in La Zagaleta gated community .

https://www.drumelia.com/en-D1023_villa-la+zagaleta-benahavis.html
The small taxes you would pay on property is IBI at 11,900 euros a year and garbage at 200 euros a year.

Andalusia region as you know has a heavy wealth tax on assets even for non-resident owners. So the big tax you would pay would be non-resident wealth tax on the property.

Wealth Tax Rates Spain​

Taxable Base (€)	Rate Band	Marginal Rate (%)	Total Tax Payable at Top of Band (€)
0.00 – 167,129.44	167,129.45	0.2	0.00
167,129.45 – 334,252.87	167,123.43	0.3	334.26
334,252.88 -668,499.74	334,246.87	0.5	835.63
668,499.75 – 1,336.999.50	668,499.76	0.9	2,506.86
1,336.999.51 – 2,673,999.00	1,336,999.50	1.3	8,523.36
2,673,999.01 – 5,347,998.02	2,673,999.02	1.7	25,904.35
5,347,998.03 – 10,695,996.05	5,347,998.03	2.1	71,362.33
10,695,996.06 and upwards	Upwards	2.5	183,670.29 upwards

For easy maths lets just say the wealth tax owed is an average of 2% per annum. Thats 216k in wealth tax you would have to pay each year. But if you owned the property via an offshore company in certain countries without a certain clause in the DTA you would totally avoid the wealth tax. Saving yourself 216k a year.


You can read more about this below detail from KPMG .

https://home.kpmg/us/en/home/insigh...-property-indirectly-owned-non-residents.html

 

[JohnnyDoe]

Sure,

For example lets say you want to buy the below 10.8m euro holiday Villa in La Zagaleta gated community .

https://www.drumelia.com/en-D1023_villa-la+zagaleta-benahavis.html
The small taxes you would pay on property is IBI at 11,900 euros a year and garbage at 200 euros a year.

Andalusia region as you know has a heavy wealth tax on assets even for non-resident owners. So the big tax you would pay would be non-resident wealth tax on the property.

Wealth Tax Rates Spain​

Taxable Base (€)	Rate Band	Marginal Rate (%)	Total Tax Payable at Top of Band (€)
0.00 – 167,129.44	167,129.45	0.2	0.00
167,129.45 – 334,252.87	167,123.43	0.3	334.26
334,252.88 -668,499.74	334,246.87	0.5	835.63
668,499.75 – 1,336.999.50	668,499.76	0.9	2,506.86
1,336.999.51 – 2,673,999.00	1,336,999.50	1.3	8,523.36
2,673,999.01 – 5,347,998.02	2,673,999.02	1.7	25,904.35
5,347,998.03 – 10,695,996.05	5,347,998.03	2.1	71,362.33
10,695,996.06 and upwards	Upwards	2.5	183,670.29 upwards

For easy maths lets just say the wealth tax owed is an average of 2% per annum. Thats 216k in wealth tax you would have to pay each year. But if you owned the property via an offshore company in certain countries without a certain clause in the DTA you would totally avoid the wealth tax. Saving yourself 216k a year.


You can read more about this below detail from KPMG .

https://home.kpmg/us/en/home/insigh...-property-indirectly-owned-non-residents.html

Ok but I was referring to IBI and garbage, not wealth tax, which is not (directly) a property tax.
Btw IBI is way lower than IMI for an equivalent property in Italy Garbage tax too (and in many places they don’t even separate garbage types)

 

[AbbieNormal]

Any property tax must be paid in the country where the property is located, no exceptions.

It would be in Bulgaria. It is fine to pay the tax there, just as long as it stays there, and does not have to be associated with any tax related to me in my country of residence. Is that ok and above board. Can it be that simple. Register an offshore company, allow the company to buy a property. Company pays tax on the property and income on it, to the Bulgarian tax regime and everything stays localised, or specific to Bulgaria and the offshore company, and importantly all taxes paid and everything above board. Thank you !

Which country are you buying property in firstly? Where will the offshore company be based? All countries have different rules and different types of property taxes. Some forms of taxes related to property can be legally avoided using an offshore anyway. I can give you example.



Rental income is only one type of tax. There are many more when talking about property depending on country.



This is simple not true. I can give example in Europe where the Double Taxation Agreement (DTA) allows one to avoid some taxes in country where property is owned via on offshore company.

Hi there and thank you for your reply. Yes it would be in Bulgaria, or possibly Italy. It is fine to pay the tax there, just as long as it stays there, and does not have to be associated with any tax related to me in my own separate country of residence. Is that ok and above board. Can it be that simple. Register an offshore company, allow the company to buy a property. Company pays tax on the property and income on it, to the Bulgarian or Italian tax regime, everyones happy, and everything stays localised, or specific only, to Bulgaria/Italy and the offshore company, and importantly all taxes paid and everything above board and proper. Thank you !

 

[Martin Everson]

Hi there and thank you for your reply. Yes it would be in Bulgaria, or possibly Italy. It is fine to pay the tax there, just as long as it stays there, and does not have to be associated with any tax related to me in my own separate country of residence.

Firstly your country may have a double taxation agreement (DTA) with Bulgaria or Italy. You may not have to pay taxes in your country of residency anyway. So you maybe worrying about nothing.

Is that ok and above board. Can it be that simple. Register an offshore company, allow the company to buy a property. Company pays tax on the property and income on it, to the Bulgarian or Italian tax regime, everyones happy, and everything stays localised, or specific only, to Bulgaria/Italy and the offshore company, and importantly all taxes paid and everything above board and proper. Thank you !

For the country where property is based it is indeed that simple. But for you not.You need to see what DTA exists between your country and the properties country as mentioned. If for example your residency country has wealth tax on global assets and no DTA you may still be liable to pay tax at home on property held abroad.

You also need to look a your CFC rules in your country of residency. You may still have an obligation to report the offshore company you control even if no taxes are owed to taxman .