Buying and renting out property in Spain through a company: is it possible?

Three possible structures: which one suits you best?

In practice, there are three main options.

The first option is a direct purchase without a permanent establishment. The foreign company acquires the property in its own name and rents it out without having an office or staff in Spain. This is generally suitable for passive rental of one or a few properties.

The second option is a branch (sucursal) in Spain. This branch is registered in the Spanish Commercial Register and is useful when managing multiple properties in a more active and professional way.

The third option is a Spanish subsidiary, usually an S.L. (Sociedad Limitada). This is the most common structure for larger investments. It is a Spanish limited liability company with its own accounting, providing more clarity and legal security.

The most suitable structure depends on the number of properties, the size of the investment and the level of involvement you want. At NB-ESTATES, we are happy to help you make the right choice.

Practical steps: what do you need?

To purchase property in Spain through a foreign company, several administrative steps are required.

You will need the appropriate documentation, such as the incorporation deed, articles of association and details of the directors. These documents must be apostilled and translated into Spanish by a sworn translator.

In addition, the company must obtain a Spanish tax identification number (NIF – Número de Identificación Fiscal). The person signing on behalf of the company will generally need a NIE (Número de Identificación de Extranjero).

For companies outside the EU/EEA, appointing a tax representative is often required. In practice, this is also recommended for many European companies.

Finally, in practice a Spanish bank account is necessary to pay taxes, IBI (Impuesto sobre Bienes Inmuebles) and community fees. Banks apply strict controls in line with anti-money laundering regulations.

Taxes on purchase

When buying property in Spain, different taxes apply depending on the type of property.

In addition, you should take into account notary fees, registration costs and possible advisory fees.

Renting out through a foreign company

Rental income from a foreign company is subject to Spanish Non-Resident Income Tax (IRNR – Impuesto sobre la Renta de no Residentes).

It is important to consider the risk of a permanent establishment. If you have your own staff or office in Spain and carry out an organised economic activity, this may be considered a permanent establishment. In that case, profits are taxed at the general corporate tax rate of 25% and additional administrative obligations apply.

In addition, annual property tax (IBI – Impuesto sobre Bienes Inmuebles) must be paid. If the property is not rented out, a notional income tax generally also needs to be declared.

Conclusion

Foreign companies can purchase and rent out property in Spain without any issue. However, the success of the investment largely depends on the chosen structure, proper administrative handling and full compliance with all tax obligations.

At NB-ESTATES, we have extensive experience assisting international investors. We work with specialised Spanish notaries, tax advisors and lawyers to ensure a smooth and secure process.