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Seven considerations when buying a holiday home with your company
If you are considering buying a holiday home through a Belgian or Dutch company, there are several considerations you need to take into account. Although buying a second home with the help of a company can be attractive, there are national as well as foreign tax aspects that you should not overlook. Below we provide an overview of seven important points:
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- VAT or registration rights at the time of purchase: In Spain, VAT or registration tax is due when purchasing real estate.
- VAT on new construction not always recoverable: Although it is common for VAT you pay on new construction to be deductible for VAT-liable companies, this can depend on the real estate activity. In some cases, VAT is not deductible, for example when the property is rented out without additional services.
- Tax on rental income in Spain: Rental income from real estate in Spain is taxed, both for individuals and companies. Thanks to 'double taxation treaties', these incomes are exempt from taxation in the company's country, but they require local accounting obligations and declarations.
- Double taxation on personal use: When a company makes a holiday home available to its company manager for free, this can lead to double taxation, both in the company's country and in the country where the property is located.
- Wealth tax: Spain levies a wealth tax. It is important to check whether your holiday home is affected by this.
- Capital gains tax on sale: When selling the property at a profit, capital gains tax will be due. Both the company and the buyer have tax obligations in Spain.
- Donation and inheritance: Donation or inheritance of a company with foreign real estate can lead to double taxes, as gift and inheritance taxes can apply in your own country of residence.
It is essential to carefully consider these points and, if necessary, seek professional advice from a tax advisor to avoid unpleasant surprises when buying a holiday home in the name of a company.
