When I sat down with the team at a property investment company in Alicante on a warm afternoon in early 2025, this was the question I needed answered before I could commit to anything. I’d heard vague things about tax advantages of using a company. I didn’t really understand what they meant. By the end of that meeting, with a rough comparison scribbled on paper in front of me, it was one of the clearest financial decisions I’d ever made.
Here’s what I learned.
First: the thing most people don’t realise about company taxation
A lot of people who’ve never run a company aren’t clear on this, so it’s worth saying plainly: a company pays tax on its profit, not on its total income. That means all legitimate business expenses — management fees, accountant costs, insurance, community fees, repairs, virtual office — are deducted before tax is calculated. You only pay tax on what’s left.
As an individual buyer in Spain, if you’re a UK resident, you pay 24% on your gross rental income. No deductions. Every pound that comes in is taxable before any costs are taken out. A court ruling in July 2025 has begun to challenge this for non-EU residents, but it’s not yet fully implemented — for now, assume no deductions as a personal UK buyer.
That difference alone is significant. But there’s more.
The amortisation allowance
A Spanish company can amortise — write off — a percentage of the building value each year against taxable income. The standard rate is 3% per year of the building value, excluding land. Your accountant will calculate the exact split between land and building value for your specific property, but on a typical apartment purchase this represents a meaningful annual deduction that significantly reduces the taxable base.
As an individual buyer, this allowance doesn’t exist.
The real numbers compared
Here’s a rough comparison based on the same investment and rental income under both structures. These figures were worked through with a Spanish property specialist during my buying process — they’re illustrative rather than precise, and your own numbers will vary. Corporation tax figures below use the standard 25% rate; newly formed Spanish companies benefit from a reduced 15% rate for their first two profitable years. Always take qualified tax advice for your specific situation.
Personal ownership (UK resident):
Total investment: €185,000
Annual rent: €22,000
Management commission (10% + IVA): €2,750
Other outgoings: €5,280
Gross profit: €13,970
Spanish non-resident tax at 24% (on gross income, no deductions): €5,280
UK tax offset by Spanish tax paid — nothing additional owed at basic rate
Net profit after tax: €8,690
Accountant fees: €1,000
Final net: approximately €7,690
Company ownership (standard 25% corporation tax):
Total investment: €185,000
Annual rent: €22,000
Management commission (10% + IVA): €2,750
Other outgoings: €5,280
Amortisation (3% of building value, approx): €4,000–€5,000*
Gross taxable income: approximately €7,000–€8,000
Corporation tax at 25%: approximately €1,750–€2,000
Net profit after tax: approximately €12,000–€12,500
Accountant fees: €2,000
Final net: approximately €10,000–€10,500
*Your accountant will confirm the exact amortisation figure based on your land/building split.
The difference: approximately €2,300–€2,800 more per year through a company structure — even at the higher 25% corporation tax rate. In the first two years, at the reduced 15% new company rate, the advantage is even greater.
Over ten years that’s €23,000–€28,000. Over twenty years, up to €56,000 — on the same property, same rent, same investment.
The partner tax rate problem
If you’re buying jointly with a partner who is a higher rate UK taxpayer, the personal route gets significantly worse.
Under the UK/Spain double taxation treaty, Spain taxes first. You then declare the same income to HMRC and claim Foreign Tax Credit Relief — the Spanish tax paid offsets your UK liability. So:
Basic rate UK taxpayer: pays 24% to Spain, nothing more owed to HMRC
Higher rate UK taxpayer: pays 24% to Spain, then 16% difference to HMRC — total 40%
Additional rate taxpayer: pays 24% to Spain, then 21% difference to HMRC — total 45%
In our case, my partner is a higher rate taxpayer. Joint personal ownership would have meant 40% total tax on rental income. In my name alone it would have been 24%. Through the company it’s effectively 25% on a much smaller taxable base — and 15% in those first two years.
The company won on every scenario we ran.
The Spanish mortgage problem for married couples
One more thing worth knowing — and this surprised us. In Spain, whether you apply for a mortgage together or separately, if you’re married the lenders count all household finances as one. Both mortgages, both incomes, all liabilities. Our combined mortgage position meant we were considered overstretched by Spanish lending standards, regardless of whose name the application was in.
This is one reason we ended up buying in cash through the company — the mortgage route simply wasn’t available to us. The company structure made that clean. The company has its own financial identity, separate from ours personally.
The longer game
I’ll be honest about why we really chose the company route. It wasn’t primarily about tax — though the numbers make the case clearly. It was about the long game.
We’re not ready for our dream Spanish villa yet. We don’t know Spain well enough. We haven’t found the right place. But we knew that if we waited any longer we’d miss the market entirely — prices in Valencia had already moved beyond our reach in the time we’d been researching and we kept hearing rumours about the incoming 100% tax for UK buyers.
The plan is to buy something commercial now, build equity, rise with the market, reinvest the profits, and in a decade or two have the knowledge and the capital to buy exactly where we want to be. Possibly multiple properties. Possibly something to pass to our son one day.
If that’s the plan, a Spanish company isn’t just a tax vehicle. It’s the infrastructure for everything that comes next. You can hold multiple properties in one entity. You spread the accountant and admin costs across the portfolio. You build a Spanish financial history. You create something that can grow with you.
The Elche flat is the foundation. The company is the structure we’ll build on.
The honest caveats
The company route costs more to set up and more to maintain. Annual accountant fees are higher. There’s more administration. If you’re buying one small property and never plan to buy another, the maths may not stack up as clearly.
And tax rules change. The July 2025 court ruling on deductions for personal buyers is worth watching — it may improve the personal route over time. Always take current, qualified advice from a Spanish tax specialist before making this decision.
This article reflects my experience and the figures I worked through during my buying process in 2025. It is not tax or legal advice.