Buy business or private in Ibiza: which is the best way?
Are you hesitating between buying a house in Ibiza for business or private use? You can finance the property privately, either with your own funds or with a mortgage. On the other hand, you can also choose to finance the house(s) with a company. In fact, this can be either a Dutch company with liquidities or a new Spanish company to be set up. This company can even fall under the Dutch private limited company. What is the best choice and what should you take into account? We list the various options.
Buying privately: for your own use
In the case of (mainly) personal use, it is wise to buy a home on Ibiza privately. You submit an annual tax return on a fictitious income from the cadastral value. You have relatively little to worry about.
Of course it is possible to rent out the house. You have to file an income tax return every quarter. You pay 19 percent tax on the net rental income. This is the rental income minus the costs, so that a net amount remains. You pay wealth tax on homes that, after deduction of any mortgage financing, have a purchase value of more than 700,000 euros.
Business purchase: rental and multiple residences
Do you have a Dutch BV with liquidity? By using it to purchase a Spanish home, you avoid having to transfer the amount to your private capital and pay 25 percent tax on it.
If you rent out the property in Spain, you pay tax on the rental income in the same way as in private. The business purchase therefore mainly benefits from the saving of 25 percent income tax for substantial interest.
You can also choose to set up a Spanish private limited company (BV) (sociedad limitada, SL). This is wise if you plan to buy several properties and rent them out. With a Spanish limited company you benefit from more deductions, for example due to depreciation. The taxable profit is lower, so that you pay relatively less tax.
Buy for business or pleasure on Ibiza
Do you hesitate between a business purchase and a private purchase on Ibiza? We are happy to think along with you, based on both the Spanish legislation and your personal situation. So are you curious what would be a good idea in your case? And how do you ensure that you arrange this both financially and fiscally? We can advise you on the possibilities of buying privately or in business, always with an eye to the future and what exactly you intend to do.
Do you want to buy commercially or privately on Ibiza or do you have questions about our services? Please contact our office in Ibiza or in the Netherlands. Of course we speak English.
