Property and overseas assets are two areas HM Revenue and Customs (HMRC) have focused on over the past few years, with campaigns encouraging the disclosure of omitted income. In addition to omitted income, we have also seen the introduction of the Trust Registration system, to ensure the UK authorities have transparency over what UK trusts are in place and who benefits from them.
Do you own Spanish property through a Limited Company?
News announced this month that the Spanish tax authorities are also clamping down on transparency of ownership in respect of property ownership in Spain; with the use of an Ultimate Beneficial Owner Register.
With over 5,000 Spanish properties owned by foreign investors, most of whom are UK residents, it is not surprising the Spanish authorities want clarity on who owns the properties. Previously the Spanish authorities were not concerned with international investors, but with public finances becoming stretched they are now showing a keen interest in this area and have even reviewed the definition of tax fraud under Spanish tax law, issuing a definition of aggressive tax planning.
Many of these Spanish properties are owned by foreign corporate structures as a way to minimise taxation. These will be the target of the Spanish authorities, especially companies created before 2018 that have not been assessed recently.
Spain introduces The Ultimate Beneficial Owner Register (UBO)
The Ultimate Beneficial Owner Register (UBO) will be the Spanish authorities’ new weapon to tackle this. It came into force a year ago and the plan is that it will look through opaque structures in order to make clear who the ultimate beneficial owner is and that the properly accounted for. Be careful – where this is not declared the company director will be legally responsible.
The register is being rolled out across all EU Member States and data is shared without any prior consent. This rule requires owners of Spanish property to disclose the UBO in the yearly Corporation Tax Return, providing details of any shareholder who owns at least 25% of the share capital.
These changes are yet another reminder of the constant change property owners are facing and this time not only by the UK Government but other countries are wanting the same visibility in who owns what within their country.
The constant changes we face today means that even the most diligent are being caught out. Property ownership is more complex than ever before and it’s crucial that your business advisors are supporting you with regular updates of change and taking action where required.
In summary, if you own property in Spain, through a corporate structure, you should seek advice from a tax advisor as soon as possible to ensure you are fully compliant to avoid any penalties or further action.
If you’re a landlord who owns property elsewhere in the world it’s also important for you to regularly take stock of your properties. Take a look at where they are located and the structures in which they are owned to ensure changes do not adversely impact your position from both a tax and compliance perspective.