The indirect ownership of real estate through companies has long been one of the most widely used structures in Spain for organising real estate wealth with a view to tax efficiency, asset protection and succession planning. For many years, placing a company between the individual owner and the property was seen as an almost automatic solution for sophisticated investors and families with significant assets.
However, the legal and tax framework has changed considerably. The definition of a holding or asset-holding entity under the Spanish Corporate Income Tax Act, the extension of Wealth Tax to indirect ownership of Spanish real estate, and the consolidation of the Temporary Solidarity Tax on Large Fortunes have reduced part of the tax advantages that once justified these structures.
That is why the key question today is clear: is it still tax efficient to hold real estate through a company in Spain? The answer cannot be generic. It depends on the type of property, the size of the estate, the tax residence of the owner, the use of the asset and, above all, whether there is genuine economic activity behind the structure.
In this article, we analyse the current tax advantages, the main risks, and the legal and practical criteria that should be reviewed before using or maintaining this type of arrangement. If you need specific advice in this area, you can also visit Resitax’s Real Estate Law in Mallorca page for more information.
What is indirect ownership of real estate through companies?
Indirect ownership of real estate exists when an individual does not own the property directly in their personal estate, but the property is instead held by a company in which that individual is a shareholder, either directly or indirectly.
This structure may be used through both Spanish and foreign companies, and has traditionally been employed to:
Reduce the initial tax burden
Corporate taxation at the general 25% Corporate Income Tax rate may, in some cases, be more efficient than direct taxation through Personal Income Tax.
Facilitate reinvestment
A company can retain profits without immediate distribution, which may support capital accumulation and the expansion of a real estate portfolio.
Improve succession planning
The transfer of shares can be easier to organise than the direct transfer of real estate, particularly in family structures.
Separate assets and risk
The company acts as a separate vehicle, which may provide stronger asset protection against certain liabilities.
That said, these advantages do not always remain in place. Everything depends on how the structure is set up and whether it passes the test of real economic substance.
The asset-holding entity: the key starting point
The first issue that should be analysed in any indirect real estate structure is whether the company qualifies as an asset-holding entity.
What is an asset-holding entity?
Under the Spanish Corporate Income Tax Act, an entity is considered asset-holding when more than half of its assets consist of securities or elements not linked to an economic activity, calculated according to the average quarterly balance sheets of the tax year.
In real estate matters, this has an immediate consequence: if the company simply owns properties without carrying out a genuine economic activity, it may be treated as an asset-holding company.
When does a real estate rental activity qualify as an economic activity?
In the specific case of real estate leasing, Spanish tax law generally requires that at least one full-time employee under an employment contract be used to manage the activity in order for it to be regarded as a genuine economic activity.
This requirement is crucial because it determines access to highly relevant tax benefits. In practice, it is also one of the areas that most frequently leads to disputes with the tax authorities.
Why is this classification so important?
Whether a company is treated as an asset-holding company or as a company carrying out a real economic activity completely changes its tax treatment. An asset-holding company may lose access to important tax reliefs, while a structure with genuine economic activity may still remain highly efficient.
Indirect ownership of real estate: main tax advantages
Despite the stricter tax environment of recent years, holding real estate through a company may still offer certain advantages in specific scenarios.
Taxation at 25% under Corporate Income Tax
One of the most frequently cited advantages is taxation at the general 25% Corporate Income Tax rate, compared with the higher rates that an individual may face under Personal Income Tax.
When can this be attractive?
Where the property generates high income and there is no immediate need to extract profits personally, this tax rate may still be efficient.
What should be analysed?
It is not enough to compare 25% with Personal Income Tax. It is also necessary to assess what will happen if, in the future, the shareholder distributes dividends or sells the shares.
Deferral of taxation through retained profits
Another important advantage is the possibility for the company to retain profits instead of distributing them immediately.
What does this mean?
The shareholder does not pay Personal Income Tax on dividends until those profits are actually distributed, which allows reinvestment within the company and may create a compounding effect.
When is this particularly useful?
This deferral may be especially beneficial for growing real estate portfolios where the aim is to continue acquiring, refurbishing, leasing or repositioning assets.
Broader deductibility of expenses and depreciation
At company level, expenses related to the property may benefit from broader deductibility, provided they are properly recorded and linked to the activity.
Relevant deductible expenses may include:
- financing interest
- local property tax and similar charges
- maintenance and repair costs
- insurance premiums
- utilities
- professional and management fees
- depreciation
The importance of depreciation
Depreciation can play a major role in reducing the company’s taxable base, especially where the asset has a significant value.
Potential efficiency in transfers through share deals
A classic structural advantage lies in transferring the company that owns the real estate, rather than transferring the property directly.
Why can this be useful?
In certain situations, the sale of shares may avoid some of the tax costs that would arise in a direct transfer of the real estate asset.
The limit: anti-avoidance rules
This advantage does not apply automatically. If certain conditions are met, the transfer of shares may be taxed as if the underlying property had been transferred directly. This point therefore requires particular caution.
Succession advantages in family structures
A corporate holding structure may also make the intergenerational transfer of wealth easier.
Inheritance and gift tax relief
Where the company meets the requirements to qualify as a family business, highly relevant tax benefits may apply for Inheritance and Gift Tax purposes.
Wealth Tax exemption
In certain circumstances, the exemption for qualifying shareholdings in companies carrying out a real economic activity may also be available.
What matters in practice?
It is not enough to set up a company and place real estate inside it. To access these benefits, the legal requirements must be met strictly and consistently.
Risks of indirect ownership of real estate in Spain
The biggest mistake in this area is to assume that indirect ownership is still automatically beneficial. Today, that conclusion may be wrong in many cases.
Exclusion from the participation exemption under Article 21 of the Corporate Income Tax Act
One of the main disadvantages of being classified as an asset-holding company is the loss of the participation exemption on dividends and capital gains in certain scenarios.
Practical effect
This may create a situation of economic double taxation that significantly reduces the efficiency of the structure.
Why does it matter?
Many older structures were designed in a different legal environment. Today, it is worth reviewing whether they still make sense or whether they are now generating an unnecessary tax burden.
Wealth Tax and the Solidarity Tax on Large Fortunes in indirect ownership structures
One of the most significant tax changes in recent years has been the extension of Wealth Tax to certain cases of indirect ownership of Spanish real estate.
What has changed?
Today, indirect ownership through certain companies, including non-resident entities, may trigger Spanish Wealth Tax when the underlying assets consist mainly of real estate located in Spain.
What does this mean in practice?
This clearly reduces one of the historical advantages of international structures used for Spanish real estate holdings.
The impact of the Solidarity Tax
In addition, the Temporary Solidarity Tax on Large Fortunes has increased the overall tax cost for high-net-worth estates and has further eroded the efficiency of many holding structures.
Economic double taxation on dividends
When the individual shareholder decides to extract profits from the company through dividends, a double layer of taxation arises.
First level
The company has already paid Corporate Income Tax on the profits.
Second level
The shareholder then pays Personal Income Tax on the dividends received.
Result
The combined tax burden may come close to or even exceed levels that neutralise the original advantage of the 25% Corporate Income Tax rate.
Accounting, tax and compliance costs
A company does not only have tax implications. It also entails formal obligations and recurring costs that must be included in any efficiency analysis.
Typical obligations include:
- bookkeeping and accounting
- filing annual accounts
- submitting Corporate Income Tax returns
- advance tax payments
- informative tax forms
- compliance with obligations linked to related-party transactions or international structures
What does this mean?
In smaller structures or those with limited profitability, these costs may be enough to undermine the economic sense of the arrangement.
Risk of sham structures or tax conflict
The Spanish Tax Agency pays close attention to companies that hold assets for personal use or that have been created without genuine economic substance.
When can the issue arise?
When the company is used to hold assets for private enjoyment, when there is no real economic activity, or when the main purpose is purely tax-driven without sufficient business justification.
What can happen?
The Tax Agency may reassess the structure, recharacterise transactions and impose penalties, with significant economic and reputational consequences.
Summary table: tax advantages and disadvantages
| TAX ADVANTAGES | DISADVANTAGES AND RISKS |
|---|---|
| Taxation at 25% under Corporate Income Tax | Exclusion from the participation exemption under Article 21 for asset-holding entities |
| Tax deferral through retained profits | Exposure to Wealth Tax and the Solidarity Tax in indirect holding structures |
| Broad deductibility of expenses and depreciation | Economic double taxation on dividend distributions |
| Potential efficiency through share transfers | Risk of anti-avoidance rules applying to share deals |
| Inheritance and Gift Tax relief for family business structures | Accounting, tax and compliance costs |
| Possible Wealth Tax exemption if there is genuine economic activity | Loss of certain tax benefits available in direct ownership |
| Asset segregation and creditor protection | Risk of recharacterisation or tax conflict |
| Possible tax consolidation in groups | Lower efficiency where there is no real economic activity |
Is the corporate structure still efficient in 2026?
The answer is simple: it depends on the specific case. There is no universal solution.
When can it still be efficient?
When there is genuine economic activity
Where there is a real business structure and genuine activity, the arrangement may still be robust and tax-efficient.
When profits are not distributed immediately
Retaining profits for reinvestment may preserve a real tax advantage.
When succession planning is well structured
In family contexts, a properly designed corporate structure may still be a very useful tool.
When does it stop being efficient?
When the property is used personally
Structures involving private-use assets carry more risk and often lose their tax logic.
When the company is merely asset-holding
The loss of tax benefits and increased tax scrutiny make the structure less attractive.
When costs are high and profitability is low
For smaller estates, the structure may be more expensive than useful.
When the estate is affected by Wealth Tax or the Solidarity Tax
In larger estates, annual wealth taxation can substantially alter the overall analysis.
When indirect ownership of real estate no longer matches the investor’s goal
Indirect ownership of real estate does not always provide the same tax efficiency it did a few years ago. Before maintaining such a structure, it is important to review whether indirect ownership of real estate still makes sense in the particular case.
Key points to analyse before using a real estate holding structure
Before setting up or maintaining a company for real estate ownership, at least the following points should be reviewed:
Tax residence of the owner
A Spanish tax resident is not in the same position as a non-resident with Spanish real estate investments.
Type of property
A rental property, a private residence, a commercial premises and a diversified real estate portfolio do not produce the same tax effects.
Size and profitability
The analysis should take into account the value of the estate, the expected yield and the ongoing cost of the structure.
Purpose of the asset
It is necessary to distinguish whether the goal is investment, rental income, asset protection, succession planning or a future transfer.
Existence of genuine economic activity
In many cases, this is the decisive factor. Indirect ownership of real estate remains a widely used tool in wealth and tax planning, but only well-structured cases tend to preserve real efficiency.
Resitax in Mallorca: tax and real estate analysis for holding structures
In practice, the tax efficiency of a company holding real estate cannot be assessed through generic answers or standard templates. It requires an individual review that considers the owner’s tax residence, the type and volume of assets, the existence or absence of genuine economic activity, the succession implications and the impact of current wealth taxation rules.
At Resitax, we analyse these structures from a technical, strategic and up-to-date perspective, combining tax, wealth planning and legal analysis. If you need specific advice on property investment, succession or asset structuring in Spain, you can visit our Real Estate Law in Mallorca page.
Conclusion
The indirect ownership of real estate through companies can no longer be considered automatically efficient by default. It may still be useful in some situations, especially where there is genuine economic activity, a strong reinvestment strategy or proper succession planning. But it also carries significant risks: loss of tax benefits, double taxation, wealth taxation, higher compliance costs and increasing scrutiny by the tax authorities.
That is why, before setting up a company or keeping an existing structure in place, it is advisable to review whether it still makes sense from both a tax and wealth planning perspective.
Contact Resitax
If you want to know whether an asset-holding company or an indirect real estate ownership structure is still efficient in your particular case, Resitax Mallorca can help you assess it in depth. We will review your situation, identify risks and design a strategy aligned with current Spanish tax law.
You can contact our team here: Resitax Contact
SEO FAQ: indirect ownership of real estate through companies
Is it still worth holding real estate through a company?
It depends on the case. It may still be efficient where there is genuine economic activity, profits are reinvested and the structure has been properly designed. In other cases, taxation and compliance costs may make it less attractive.
What is a real estate asset-holding company?
It is a company whose assets mainly consist of real estate or elements not linked to a genuine economic activity. This classification may limit access to certain tax benefits.
What are the advantages of buying property through a company?
Potential advantages may include taxation at 25% under Corporate Income Tax, tax deferral, broader deductibility of certain expenses, asset segregation and succession advantages in some family-business scenarios.
What are the tax risks of holding property in a company?
The main risks include economic double taxation on dividends, indirect exposure to wealth taxation, exclusion from certain tax reliefs, compliance costs and the risk of reassessment if the structure lacks genuine substance.
When does a real estate company carry out an economic activity?
Generally, when the rental or exploitation activity is organised with sufficient human and material resources. This must be analysed carefully in each individual case.
Is it better to own a property personally or through a company?
There is no single answer. It depends on the use of the property, the size of the estate, the expected profitability, the owner’s tax residence and the ultimate purpose of the investment.
Can a company help with succession planning for family real estate?
Yes. In properly designed family structures, holding real estate through a company may facilitate the transfer of shares and improve succession planning, provided the legal requirements are strictly met.
