ownership of real estate through companies has been one of the most common ways in Spain to structure real estate portfolios for years, taking into account tax efficiency, asset protection, and estate planning. For decades, using a company as a intermediary between the owner and the property was seen as an almost automatic solution for investors and families with significant assets.
However, the regulatory framework has changed significantly. The definition of a holding company in the Corporate Income Tax Law, the extension of the Wealth Tax to the indirect ownership of real estate in Spain, and the consolidation of the Temporary Solidarity Tax on Large Fortunes have reduced some of the tax advantages that previously justified these types of structures.
Therefore, now more than ever, the question is clear: is it still fiscally efficient to own real estate through a company in Spain? The answer cannot be given in a general way. It depends on the type of property, the value of the assets, the tax residency of the owner, the use of the asset, and, above all, whether or not there is a real economic activity.
This article rigorously analyzes the tax advantages, current risks , and key regulatory and doctrinal criteria to consider. If you are seeking specific advice on this matter, you can also consult Resitax's Real Estate Law service in Mallorca.
What is indirect ownership of real estate through companies?
Indirect ownership of real estate occurs when a natural person does not hold the property directly in their assets, but rather it is registered in the name of a company of which that person is a partner, directly or indirectly.
This structure can be used in both Spanish and foreign companies, and has traditionally been used for:
Reduce the initial fiscal impact
Corporate taxation at the general rate of 25% in Corporate Income Tax can, in certain cases, be more efficient than direct taxation in Personal Income Tax.
Facilitate reinvestment
The company allows profits to be retained without being distributed, which favors capital accumulation and the expansion of a real estate portfolio.
Improve succession planning
The transfer of shares can be more orderly than the direct transfer of real estate, especially in family structures.
Separating assets and risk
The company acts as a separate vehicle, which can offer greater asset protection against certain contingencies.
However, these advantages don't always hold true. It all depends on how the structure is configured and whether it passes the test of real economic substance.
The asset entity: the key starting point
The first analysis that must be done in any indirect property ownership structure is to determine whether or not the company is considered a patrimonial entity.
What is a patrimonial entity?
The Corporate Income Tax Law considers a holding company to be one in which more than half of its assets are made up of securities or elements not related to an economic activity, calculated according to the average of the quarterly balance sheets of the year.
In the real estate sector, this has an immediate consequence: if the company merely owns properties without developing a real economic activity, it may be classified as a holding company.
When is there economic activity in the leasing of real estate?
In the specific case of real estate leasing, the rule generally requires that, in order to consider that there is economic activity, at least one person is employed with a full-time employment contract.
This requirement is crucial because it determines access to significant tax benefits. Furthermore, in practice, it is one of the points that generates the most conflicts with the tax authorities.
Why does this rating matter so much?
Whether a company is a holding company or has genuine economic activity completely changes its tax treatment. A holding company may be excluded from very important incentives, while a structure with genuine economic activity can maintain remarkable tax efficiency.
Tax advantages of owning real estate through a company
Despite the tightening of regulations in recent years, corporate ownership of real estate continues to offer certain advantages in specific cases.
Corporate Income Tax at 25%
One of the most cited advantages is the taxation at the general rate of 25% in Corporate Income Tax, compared to higher rates that an individual may bear in Personal Income Tax.
When might it be interesting
When the property generates high income and there is no immediate need to extract the benefits at a personal level, this taxation can be efficient.
What should be analyzed
It's not enough to compare the 25% with income tax. We also need to consider what will happen if the partner distributes dividends or sells their shares in the future.
Tax deferral for withholding of profits
Another important advantage is the possibility for the company to retain the profits without distributing them immediately.
What does this deferral entail?
The partner does not pay income tax on dividends until they receive those earnings, which allows reinvestment within the company and generates a capital accumulation effect.
When is it usually useful?
This deferral can be especially interesting in growing real estate portfolios, where the goal is to continue buying, renovating, operating or repositioning properties.
Greater deductibility of expenses and depreciation
In corporate settings, expenses related to the property may have a wider deduction, provided they are correctly accounted for and linked to the business activity.
Expenses that may be relevant
Among others, the following may be deductible:
- financing interest
- Property tax and other taxes
- maintenance and repair costs
- insurance
- supplies
- fees for consultants and managers
- amortizations
The importance of amortization
The depreciation of the property can have a very important impact on reducing the taxable base of the Corporate Income Tax, especially when dealing with assets of high value.
Potential efficiency in transmission through shares
A classic structural advantage is to transfer the company that owns the property, instead of directly transferring the property.
Why it might be interesting
The sale of shares can, in certain scenarios, avoid the tax costs that would exist in a direct transfer of the asset.
The limit: the anti-avoidance clause
This advantage is not automatic. If certain requirements are met, the transfer of shares may be taxed as if the property itself had been transferred directly. Therefore, this point should be reviewed with particular care.
Inheritance advantages in family structures
The corporate structure can also facilitate the generational transfer of assets.
Reduction in Inheritance and Donations
When a company meets the requirements to be considered a family business, very significant benefits can be applied in the Inheritance and Gift Tax.
Wealth Tax Exemption
In certain cases, the exemption provided for holdings in entities with real economic activity may also apply.
What the practice requires
Simply creating a company and owning property within it is not enough. To access these benefits, you must strictly comply with the legal requirements.
Current tax disadvantages and risks of indirect ownership
The big mistake in this matter is thinking that indirect ownership is still automatically advantageous. Today, that conclusion may be incorrect in many cases.
Exclusion of the exemption under Article 21 of the LIS for asset-holding entities
One of the main drawbacks of being classified as a holding company is the loss of the exemption on dividends and capital gains in certain cases.
Practical consequence
This can create a situation of double economic taxation that significantly reduces the efficiency of the structure.
Why is it important?
Many older tax plans were designed under different regulations. Today, it's worth reviewing whether they still make sense or if they're creating an unnecessary tax burden.
Subjection to Wealth Tax and ITSGF in indirect ownership
One of the most relevant changes in recent years has been the expansion of the application of the Wealth Tax to cases of indirect ownership of real estate in Spain.
What has changed
Today, indirect ownership through certain companies, even non-resident ones, can lead to wealth taxation in Spain when the underlying asset consists mainly of real estate located in Spanish territory.
What does this mean in practice?
This clearly reduces one of the historical advantages of international structures used for real estate assets.
The impact of ITSGF
Added to this is the Temporary Solidarity Tax on Large Fortunes, which has increased the overall tax cost for high-net-worth individuals and eroded the efficiency of many holding structures.
Double economic taxation on dividends
When a partner who is an individual decides to withdraw income from the company via dividends, a double layer of taxation occurs.
First layer
The company has already paid corporate income tax on the profit.
Second layer
The partner then pays income tax on the dividends received.
Result
The combined burden can approach or even exceed levels that neutralize the initial 25% advantage in Corporate Income Tax.
Accounting, tax and commercial compliance costs
The company has more than just tax implications. It also entails formal obligations and recurring costs that must be included in any efficiency analysis.
Usual obligations
- commercial accounting
- filing of annual accounts
- Corporate Income Tax return
- installment payments
- information models
- compliance with obligations related to transactions with international partners or structures
What does this mean?
In small or low-profit structures, these costs can make the company lose economic sense.
Risk of simulation or conflict with the Tax Administration
The Tax Agency pays special attention to companies that hold personal property or structures created without real economic substance.
When might the problem arise?
When the company is used to support privately owned properties, when there is no real activity, or when the main purpose is purely fiscal without sufficient economic justification.
What can happen
The Administration can regularize the situation, reclassify operations and impose sanctions, with the consequent economic and reputational impact.
Summary table: tax advantages and disadvantages
| TAX ADVANTAGES | DISADVANTAGES AND RISKS |
|---|---|
| Corporate Income Tax at 25% | Exclusion of the exemption under Article 21 of the LIS for asset-holding entities |
| Tax deferral for withholding of profits | Subjection to Wealth Tax and ITSGF in indirect ownership |
| Broad deductibility of expenses and depreciation | Double economic taxation on dividends |
| Potential efficiency in transmission through shares | Risk of applying anti-avoidance clauses |
| Reduction in Inheritance and Gift Tax in Family Businesses | Tax, accounting and commercial compliance costs |
| Possible exemption from Wealth Tax if there is economic activity | Loss of certain tax benefits associated with direct ownership |
| Separation of assets and protection against creditors | Risk of tax simulation or conflict |
| Possible tax consolidation in groups | Lower efficiency if there is no real economic activity |
Will the corporate structure still be efficient in 2026?
The answer is clear: it depends on the specific case. There is no universal solution.
When can it still be efficient?
If there is real economic activity
When there is a genuine media organization and real economic exploitation, the structure can remain robust and fiscally attractive.
If the profits are not distributed immediately
Retaining profits for reinvestment can maintain a competitive advantage.
If the succession planning is well designed
In family settings, a well-structured society can still be a very useful tool.
When does it stop being efficient?
If the property is used for personal purposes
Structures with privately owned assets carry much more risk and often lose their fiscal purpose.
If the company is purely asset-based
The loss of profits and the increase in tax control significantly reduce its attractiveness.
If there are high costs and low profitability
In small estates, the structure can be more expensive than useful.
If the assets are affected by IP or ITSGF
In cases of high net worth, wealth taxation can completely alter the analysis.
Keys to correctly analyzing a real estate structure
Before establishing or maintaining a company for holding real estate, it is advisable to review at least these points:
Tax residence of the holder
A tax resident in Spain is not the same as a non-resident with real estate investments in Spanish territory.
Property type
A rented property, a home for personal use, a commercial premises, or a diversified portfolio do not produce the same effects.
Volume and profitability
The analysis must take into account the value of the assets, the expected return, and the cost of maintaining the structure.
Purpose of the asset
It is important to distinguish whether the objective is to invest, rent, protect assets, plan for succession, or prepare for a future transfer.
Existence of real economic activity
This is, in many cases, the decisive element.
Resitax in Mallorca: tax and real estate analysis of asset structures
In practice, the tax efficiency of a real estate holding company cannot be assessed with generic answers or standardized frameworks. It requires an individualized analysis that considers the owner's tax residency, the type and volume of assets, the existence or absence of genuine economic activity, inheritance implications, and the impact of current wealth tax regulations.
At Resitax, we analyze these types of structures from a technical, strategic, and up-to-date perspective, combining tax, asset, and legal analysis. If you need specific advice on real estate, investment, or estate planning, you can visit our Real Estate Law page in Mallorca.
Conclusion
ownership of real estate through companies can no longer be considered, in and of itself, an automatically efficient solution. It remains useful in some scenarios, especially when there is genuine economic activity, a sound reinvestment strategy, or proper estate planning. However, it also presents significant risks: loss of tax benefits, double taxation, wealth taxation, higher compliance costs, and increasing scrutiny from tax authorities.
Therefore, before forming a company or maintaining an existing structure, it is advisable to check if it is still valid from a tax and asset perspective.
Contact Resitax
If you want to know whether a holding company or an indirect ownership structure is still efficient for you, at Resitax Mallorca we can help you analyze it in detail. We will study your situation, review risks, and design a strategy that complies with current regulations.
You can contact our team here: Resitax Contact
FAQ: Indirect ownership of real estate through companies
Is it still profitable to own real estate through a company?
It depends on the case. It can still be efficient if there is real economic activity, profits are reinvested, and the structure is well-designed. In other cases, the tax burden and compliance costs may make it less attractive.
What is a real estate asset management company?
It is a company whose assets consist primarily of real estate or assets not used in an economic activity. This classification may limit access to certain tax benefits.
What are the advantages of buying a property through a company?
It may offer taxation at 25% in Corporate Income Tax, tax deferral, greater deductibility of certain expenses, asset separation and inheritance advantages in certain cases.
What are the tax risks of owning real estate in a company?
Among the main risks are double taxation on dividends, indirect wealth taxation, exclusion of certain tax benefits, compliance costs and the risk of regularization due to lack of economic substance.
When does economic activity exist in a real estate company?
Generally speaking, when the lease management is organized using sufficient personnel and resources. This point should be analyzed in detail in each case.
Is it better to own a flat in your own name or through a company?
There is no single answer. It depends on the use of the property, the size of the assets, the expected return, the tax residency of the owner, and the ultimate goal of the investment.
Can a company help with the inheritance of family properties?
Yes. In well-designed family structures, corporate ownership can facilitate the transfer of shares and improve estate planning, provided that the legal requirements are met.