The Purchase Strategy
A high-end property of certain value carries significant tax implications for the buyer.
Buying such poperty will require careful tax planning from the outset in order to define the most efficient acquisition strategy. Key factors to assess include the buyer’s tax residence, any applicable double tax treaty, the origin and structuring of the funds, and the intended use of the property — whether as a main residence, second home, long-term rental, or short-term holiday letting. Each of these elements can materially affect the overall tax exposure and should be reviewed before the purchase is completed.
Here are some examples on how tax planning defined the purchase strategy:
Case 1 – The UK‑Spain Retirement Move
The problem
- UK tax year runs April–April; Spain uses the calendar year
- UK main residence: tax‑free on sale
- UK business sale: 25% allowance in the UK
- Move to Spain too early → Spain taxes everything done since January
What went wrong (without planning)
The tax mismatch
- Arrival in Spain in March → Spanish tax resident for the full year
- Business sale loses the UK 25% allowance in Spain
- UK property sale remains tax‑free in Spain only if sold within 2 years
- A few months’ timing changes the entire tax result
The strategy
Timing is everything
- Buy the house in Spain, but delay becoming tax resident
- Stay under 183 days → non‑resident for that year
- UK transactions taxed only in the UK
- Just a few months’ difference saves significant tax
Case #2 – The Spanish Wealth Tax Trap
The problem
- Serbian investor buying a €5M property in Spain
- Direct ownership triggers the Solidarity Tax on High Net Worth Individuals
- Funds already personally owned after selling his business
- Prior advice focused on splitting ownership via family gifts
Why the “simple fix” failed
Hidden costs and limits
- Gift strategy requires prior wealth transfers and tax exposure
- As a Serbian non‑resident individual, rental income is taxed on gross income
- No deduction of costs allowed when renting personally
- Wealth tax exposure remains year after year
The strategy
Using structure, not fragmentation
- Set up a Spanish company to acquire the property
- Spain–Serbia tax treaty prevents Spain from taxing company shares under wealth tax
- Rental activity through the company allows full cost deduction
- Investment qualified for the Golden Visa via share capital exceeding €1M
Case #3 – The Over‑65 Exit Mistake
The problem
- French citizen, Spanish resident for over 10 years
- Age 67, selling his Spanish permanent home
- Over‑65 exemption in Spain → no CGT if sold as a resident
- Plans to move back to France after the sale
What was at risk
A timing trap
- Sale in March + move back to France → risk of Spanish non‑residency
- As non‑resident, the over‑65 exemption does not apply
- Only possible relief: reinvestment in a new home
- Not available here, as he already owned a house in France
The strategy
A few months decide everything
- Put the property on the market early
- Delay the completion date until after summer
- Remain Spanish tax resident in the year of sale
- Over‑65 exemption applies in full → major tax saving
Case #4 – The Trust That Didn’t Travel
The situation
- UK resident planning retirement and relocation to Spain
- On UK legal advice, transfers assets into a Trust to mitigate UK IHT
- Trust structure perfectly valid and costly under UK law
- Later moves to Spain, while his daughter already lives in Barcelona
What went wrong
A legal concept that doesn’t cross borders
- Trusts are not recognised under Spanish civil law
- For Spanish tax purposes, the Trust is treated as transparent
- The settlor is still considered the owner of the assets
- On death, the daughter is taxed in Spain on the full inheritance
The real lesson
Good advice in the wrong country
- A structure valid in the UK can be useless—or harmful—in Spain
- No corrective strategy once the Trust was in place
- Cross‑border tax planning must be done with the destination country in mind
- Migration without coordinated advice creates irreversible tax risks