Yes, foreigners are allowed to invest in Spain by directly purchasing a real estate asset for commercial purposes. However, a foreign investment in real estate which is valued at more than €3,005,060.52, or which is made with funds which come from a tax haven, must be reported to the Investment Registry of the Spanish Ministry for the Economy and Competitiveness (Registro de Inversiones del Ministerio de Economía y Competitividad).
Official forms DP2, D2A or D2B must be completed by the foreign investor when investing in real estate assets, further to legal resolution issued by the Dirección General de Comercio Internacional e Inversiones on 27 July 2016.
Additionally, foreigners will be required to have a Spanish Tax Identification Number (NIF), when the investor is a legal person; or Foreigner Tax Identification Number (NIE), when it is a natural person.
Military authorization will be required, by virtue of the Decree 689/1978 of 10 February, for foreign investment by directly purchasing a commercial real estate asset in the following territories:
For these territories, certain quotas for total foreign investment have been established.
Last modified 13 Mar 2025
There are various ways to carry out investment in real estate in Spain:
It is difficult to specify how much it costs to set a Spanish corporate vehicle. However, pursuant to the recent amendment of the Spanish Corporate Law, a “Single Access Point” has been created for the purposes of incorporating limited liability companies. Now all necessary incorporation procedures, including the effective commencement of the company’s economic activities can be dealt with through this single access point.
The procedure is channeled through a Single Electronic Document (DUE) in which all the relevant information on the new company must be included in accordance with the applicable law.
The DUE enables the founding shareholders of a limited liability company to choose between incorporating the company using (i) standardized by-laws; or (ii) tailored by-laws.
If the founding shareholders opt for standardized by-laws, the process involves the following steps:
At the notary’s
As a consequence, the registration of a company not using standardized by-laws requires a two-stage process: a preliminary registration, in which the incorporation date is booked; and a second registration, which is effectively an amendment to the first registration to include the tailored by-laws.
Non-residents operating in Spain through a permanent establishment are generally required to keep accounting records in Spain in accordance with the rules and regulations established for Spanish companies. Non-residents receiving income in Spain through a permanent establishment are required to appoint a Spanish resident as their tax representative. Costs may amount on average to around €6,000 per annum. The annual accounts of the foreign parent company must be filed annually with the Mercantile Registry for the area in which the branch is registered.
Foreign investments in real estate must be reported to the Investment Registry of the Spanish Ministry for the Economy and Competitiveness (Registro de Inversiones del Ministerio de Economía y Competitividad) but only if the investment is valued at more than €3,005,060.52 or if the funds come from a tax haven.
Last modified 13 Mar 2025
In Spain, there are two main types of corporate vehicle which are generally used for investment in real estate: the Limited Liability Company (sociedad de responsabilidad limitada – SL) and the public company (sociedad anónima – SA).
Foreigners can also invest by means of a Spanish branch of a Spanish or foreign company, a partnership or a collective investment vehicle.
Any participation in Spanish companies/vehicles, including the incorporation of the vehicles, must be reported to the Investments Register at the Ministry of the Economy once made through the official D1A forms, further to legal resolution issued by the Dirección General de Comercio Internacional e Inversiones on 27 July 2016. Only investments from tax havens must be reported in advance, through the official DP1 forms, although, once the investment has been reported, the investor can make the investment without waiting for an acknowledgement from the authorities.
Last modified 13 Mar 2025
The sociedad de responsabilidad limitada is a mercantile company whose capital is divided into quotas (participaciones sociales). The capital is composed of contributions from the shareholders who are not personally liable for the debts of the company. The company, irrespective of its corporate purpose, will have a commercial character.
The sociedad anónima is a mercantile company, whose capital is divided into shares (acciones). The capital is composed of contributions from the shareholders who are not personally liable for the debts of the company. The company, whatever its purpose, will have a commercial character.
A sociedad en comandita is a partnership which offers partial limited liability to partners. A sociedad comanditaria is formed by general partners and limited liability partners (socios comanditarios). The general partners are jointly and severally liable for the debts of the partnership up to their entire net worth. The liability of the limited liability partners for the obligations of the partnership is limited to the extent of their respective investments but they may not be appointed as managers of the company. These vehicles are rarely used in practice.
A sociedad en comandita por acciones (S.Com. p. A.) is a partnership in which share capital is divided into shares (acciones) and which offers partial limited liability to partners. A sociedad en comandita is formed by general partners and limited liability partners (socios comanditarios). The general partners are jointly and severally liable, up to the whole amount of their net worth, for the debts of the partnership. The liability of the limited liability partners for the obligations of the partnership is limited to the extent of their respective investments but they may not be appointed as managers of the company. These vehicles are rarely used in practice.
A general partnership (sociedad de responsabilidad colectiva) is a partnership with no limitation on partners' liability. All partners, whether or not they are managers, are jointly and severally liable for the debts of the partnership up to the whole amount of their net worth.
A real estate investment fund (fondo de inversión inmobiliario or FII) is managed by a management company (sociedad gestora or SG). This entity manages the assets and handles the administration and representation of the fund. There is also a financial entity (custodian) to hold the fund assets.
A real estate investment company (sociedad de inversión inmobiliaria) (SII) takes the form of a sociedad anónima (SA) (public company). This entity must have an accounting and administrative function. It can appoint a management company for the purposes of administration and representation.
A real estate investment trust – sociedad anónima cotizada de inversión inmobiliaria (SOCIMI) takes the form of a sociedad anónima (SA) (public company) listed on a Spanish or EU regulated stock market or on a multilateral trading system (MAB). The share capital is divided into registered shares represented by means of book entries (anotaciones en cuenta) and no limitations on the transfer of the shares are permitted.
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€3,000
€60,000
Not applicable.
€60,000
There is no minimum capital set by law for the sociedad de responsabilidad colectiva.
For an FII: €9 million. The number of unit holders must be at least 100.
€9 million. The law requires that this sum is completely disbursed when the company is formed. There must be at least 100 shareholders.
€5 million. The law requires that this sum is completely disbursed when the company is admitted to trading. The minimum number of shareholders will depend on the listing of the Company´s shares in the MAB or in the Stock Exchange.
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Approximately €600 (for an SL with capital of €3,000 excluding legal fees). The most significant costs of incorporation are the notary's fees and registration fees.
Approximately €1,000 (for an SA with capital of €60,000, excluding legal fees). The most significant costs of incorporation are the notary's fees and registration fees.
The notary's fees and registration fees.
There is an exemption from capital duties in certain circumstances.
An amount of roughly €250,000, which will include fees for legal advice, the Notary Public the fees for the admitting to trading of the Company´s shares at the relevant stock exchange or multilateral trading system, share valuation etc. In any case, costs will depend on the characteristics of the specific company (eg the asset valuation) and the transaction.
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Approximately three weeks (one week for incorporation, payment of the Transfer Tax etc and two weeks to register the company with the local mercantile registry).
However, under to Law 14/2013 of 23 September 2013 the incorporation of a limited liability company can be dealt with within 48 hours. Nonetheless, this system is not widely used.
Another possibility is to acquire a limited liability company from a seller who sells “off-the-shelf” companies, which takes roughly one or two days once the necessary powers of attorney have been granted.
Approximately three weeks (one week for incorporation, payment of the Transfer Tax etc and two weeks to register the entity with the local mercantile registry).
Two months, or five months if the relevant authorities fail to respond or they issue any objection to the proposal; the same amount of time is required to form the management company.
Three months, or five months if the relevant authorities fail to respond or they issue any objection to the proposal.
The time required depends on the choice of multilateral trading system (MAB) or regulated stock market on which the shares can be traded. In practice, a multilateral trading system is usually recommended. Due to the filing of documentation required by the MAB, this process may take between two and three months.
Last modified 13 Mar 2025
Considerable flexibility is granted to the members in relation to the setup, by-laws and rules for internal governance for an SL. SLs are intended to be more closely held entities than sociedades anónimas (SAs), and so shares are generally not freely transferable (unless acquired by other shareholders, family members or companies within the same group); and representation at the general meeting is limited.
Other important features of the legal regime for an SL are as follows:
The main features of the legal regime of a sociedad anónima are as follows:
There are two kinds of partner:
General partners are jointly and severally liable, up to the whole of their net worth, for the debts of the partnership. Limited liability partners are only liable for the amount of their contribution. Management is exercised exclusively by the general partners.
There are two kinds of partner:
General partners are jointly and severally liable, up to the whole of their net worth, for the debts of the partnership. Limited liability partners are only liable for the amount of their contribution. Management is exercised exclusively by the general partners. The difference between this and a sociedad comanditaria is that the capital of the company is divided into shares.
The sociedad de responsabilidad colectiva must be incorporated by virtue of a public deed in which following details must be included:
The amounts, if any, for their annual expenses, should be allocated to each partner manager.
The company’s name must include the name of all, some or one of its partners, including the addition of the words "y compañía".
All partners, whether or not they are managers, are jointly and severally liable for the debts of the partnership up to the whole amount of their personal net worth.
All decisions relating to the investment policy of the fund must be taken by the management company or SG (sociedad gestora). In particular, the SG handles the management of assets, the administration (accounting and legal services, advice to clients, appraisals and assessments of liquidation value, compliance with applicable regulations, etc) and the marketing of the participation units in the fund. Another entity, the depository or custodian, is entrusted with the custody and deposit of the securities. Both the fund and the SG are regulated by the CNMV (National Securities Market Commission), which requires reports every three, six and twelve months. Specifically, the SG is required to inform the CNMV and the shareholders on a regular basis about the activities of the SG and the fund.
If self-managed, the corporate governance of an SII is handled by the board of directors. If the SII appoints an SG for the purposes of administration and representation, the SG handles the management of assets, the administration (accounting and legal services, advice to clients, appraisals and assessments of liquidation value, compliance with applicable regulations, etc) and the marketing of the shares in the company. The SII is regulated by the CNMV, which requires reports every three, six and twelve months.
The SOCIMI must comply with all the regulations of the regulated stock market or of the multilateral trading system (MAB Circular 8/2016) on which the company is listed. In addition, the company must also meet specific requirements, including:
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Approximately €12,000 plus the cost of internal auditors, which amounts to approximately €10,000 to €20,000. Internal auditors are only required when certain thresholds relating to the value of assets, turnover and the number of employees are exceeded.
The FII and the management company or SG must have their accounts audited. The fiscal year must coincide with the calendar year. The SG and depositaries are entitled to be paid management and deposit commissions by the fund. The SG is entitled to be paid subscription and reimbursement commission by the fund's unit holders.
An SII’s accounts must be audited and its fiscal year must coincide with the calendar year.
The annual costs can be between €30,000 and €70,000 but again this may vary depending on the characteristics of the company. The company must designate a registered advisor (asesor registrado) and a liquidity provider for the transactions with the multilateral trading system (MAB) on which the company is listed and significant disclosure of information requirements are imposed on the company and its shareholders.
Last modified 13 Mar 2025
Corporation tax (CT) is generally payable at the rate of 25% of the profits shown in the accounts prepared in compliance with IS rules. In some cases this tax can be reduced.
This tax is fixed by each municipality and depends on the cadastral value of the real estate, which may be subject to tax rates from 0.4% to 1.3%.
Tax-resident shareholders: distributed dividends are subject to CT at the rate of 25 percent. Additionally, an exemption may be available if the participation held is, at least, 5% or more or if the investment in the shares exceeds €20,000,000 and has been held for at least one year. This requirement may be fulfilled after the distribution of the relevant dividend.
Non-tax-resident shareholders: the distribution of dividends to shareholders is subject to Spanish non-resident income tax (NRIT) at the rate of 19% unless the EU Parent-Subsidiary Directive applies (in which case no tax is payable), or an applicable tax treaty reduces the tax to a lower level.
Sale of a real estate asset:
Tax-resident owners: CT is generally payable at 25%
Non-tax-resident owners: NRIT is payable at the rate of 19% unless an applicable treaty provides otherwise
In addition, most Spanish municipalities impose a tax on the increase in the value of urban land (IIVTNU) which is payable on the transfer of property other than rural land. This is paid by the seller and calculated on, either (a) an objective method on the basis of the land’s cadastral value multiplied by a coefficient dependent on the holding period (up to 20 years), or (b) a real capital gain method on the basis of actual capital gain of the land calculated by the difference between the transfer price and the acquisition price.
Sale of a participation in a real estate company:
Tax-resident shareholders: CT is payable at the rate of 25%. Additionally, an exemption may be available if the participation held was 5% or more or the investment in the shares exceeds €20,000,000 and had been held for at least one year
Non-tax-resident shareholders: NRIT is payable at the rate of 19% unless an applicable treaty provides otherwise
A transfer of real estate assets by a business is subject to VAT (at 21%, except for residential real estate where a 10% rate applies). In the case of a second or subsequent transfer, a VAT exemption applies and the transfer is subject to Transfer Tax. Transfer Tax may be avoided if the VAT exemption is waived.
Transfer Tax amounts to between 6% and 11% of the value of the underlying real estate assets at the time of the transfer. Where the transfer is subject to and not exempt from VAT, Stamp Duty will apply (0.5–3%).
The transfer of shares is exempt from VAT and Transfer Tax . Nevertheless, Transfer Tax /VAT can be incurred on the transfer of shares in companies, when the transfer of the shares is made with the purpose of avoiding the payment of the tax that would have been paid in case of transfer of the real estate. The law considers there are tax avoidance reasons where 50% or more of the assets consist, directly or indirectly, of real estate located in Spain and are not used for business activities, and, as a result of the transfer, the buyer acquires control over the company (ie more than a 50% stake in its share capital) or increases its stake once it has obtained control.
A special tax on real estate owned by non-resident entities applies in Spain. Entities resident in a jurisdiction classified as a tax haven owning real estate or rights over property are subject to a special tax of 3 percent of the cadastral value (valor catastral) which accrues at 31 December each year.
The rental income and capital gains obtained by the SII will be taxed at a rate of 1%. To benefit to from this rate the SII must comply with the following requirements during the whole investment period:
The SII must have at least 100 shareholders
The SII's sole corporate purpose must be investment in urban real estate for rental
The assets acquired should be held for a minimum of three years, unless an early sale is authorized by the CNMV (National Securities Market Commission)
Tax-resident unit holders: CT is payable at the rate of 25%
Non-tax-resident unit holders without a permanent establishment: dividends are subject to withholding tax at the rate of 19 percent. A reduced withholding tax may apply under a relevant tax treaty
Tax-resident unit holders: CT is payable at the rate of 25%
Non-tax-resident unit holders without a permanent establishment are subject to non-resident income tax (NRIT) at the rate of 19 percent. A reduced withholding tax may apply under a relevant tax treaty
This is the broad appeal of this vehicle. In general, the SOCIMI is exempt from the payment of CT in relation to the rents arising from leasing property but the shareholders will be taxed on the dividends and gains distributed by the SOCIMI. Only where shareholders with a stake greater than 5% in the share capital are taxed at a rate lower than 10%, is a special rate of 19% payable by the SOCIMI.
An amendment to the SOCIMI regime establishes a 15% levy on the amount of any undistributed gain obtained in the tax period, deriving from:
For tax-resident companies, CT is generally payable at the rate of 25%, and for non-tax-resident companies, a rate of 19% applies.
Exceptions arise in the event of the application of specific regulations as double taxation treaties, EU regulations or any other particular circumstances on the company or its shareholders.
Last modified 13 Mar 2025
Does the concept of a 'permanent establishment' apply when a foreign person invests in real estate and, if so, how much does it cost to set up such a permanent establishment, how long does it take and what corporate governance requirements apply?
There are various ways to carry out investment in real estate in Spain:
It is difficult to specify how much it costs to set a Spanish corporate vehicle. However, pursuant to the recent amendment of the Spanish Corporate Law, a “Single Access Point” has been created for the purposes of incorporating limited liability companies. Now all necessary incorporation procedures, including the effective commencement of the company’s economic activities can be dealt with through this single access point.
The procedure is channeled through a Single Electronic Document (DUE) in which all the relevant information on the new company must be included in accordance with the applicable law.
The DUE enables the founding shareholders of a limited liability company to choose between incorporating the company using (i) standardized by-laws; or (ii) tailored by-laws.
If the founding shareholders opt for standardized by-laws, the process involves the following steps:
At the notary’s
As a consequence, the registration of a company not using standardized by-laws requires a two-stage process: a preliminary registration, in which the incorporation date is booked; and a second registration, which is effectively an amendment to the first registration to include the tailored by-laws.
Non-residents operating in Spain through a permanent establishment are generally required to keep accounting records in Spain in accordance with the rules and regulations established for Spanish companies. Non-residents receiving income in Spain through a permanent establishment are required to appoint a Spanish resident as their tax representative. Costs may amount on average to around €6,000 per annum. The annual accounts of the foreign parent company must be filed annually with the Mercantile Registry for the area in which the branch is registered.
Foreign investments in real estate must be reported to the Investment Registry of the Spanish Ministry for the Economy and Competitiveness (Registro de Inversiones del Ministerio de Economía y Competitividad) but only if the investment is valued at more than €3,005,060.52 or if the funds come from a tax haven.
Last modified 13 Mar 2025