The binding consultation V1947-22 published by the Directorate General of Taxes on September 13, 2022, constitutes a new tax approach in which the indirect holding of real estate by non-resident individuals is declared exempt from Wealth Tax.
The taxpayer is an individual resident for tax purposes in Germany who owns 100% of the shares in a German company, which holds the direct ownership of a property located in Mallorca, and therefore the taxpayer has indirect ownership of the aforementioned property. The Directorate General of Taxes concludes that the taxpayer is not subject to Wealth Tax since he is not the direct owner of the property located in Spain.
This measure has an important tax transcendence especially in tourist areas such as the Mediterranean coast or the Balearic Islands, where it is common for non-resident individuals to channel their real estate investments through companies that have their tax residence outside the Spanish state.
Indeed, if the real estate is acquired through a foreign company, the direct ownership falls on the aforementioned company, and the non-resident individual partner who holds a certain percentage of shares of the entity, being the indirect owner of the real estate, will be exempt from paying Wealth Tax.
Special attention to the real estate acquired in Spain directly by the non-resident individual, since these would be subject to Wealth Tax by real obligation.
The resolution is binding and retroactive, so that investments with similar characteristics to those of the resolution that have occurred in non-prescribed fiscal years will have to be analyzed in detail, for the purpose of studying the filing of a claim for undue income.
How can we help you?
If you have any doubts in this regard, you can contact us and our team specialized in international taxation will advise you and give you more information on the tax transcendence with respect to the indirect holding of real estate in Spanish territory by non-resident individuals.