Typical trading structures and taxes.

Please, don´t try to start any structure without prior legal and tax advice by professional attorneys/accountants.

1) SPANISH ETVE (owned by EE.UU Corporation in a 90% and in a 10% By Spanish SL).

Shares of the ETVE

25% - Russian Company

25% - German Company

50% - Austrian Company

Taxable incomein Spain of the EE.UU Corporation: 0%

Taxable income in Spain of the Spanish SL: 10% at a 35% rate

2) A UKindividual owns a property in the Golden Coast of Spain.

Tax rate (annual): between 1.1% - 2% minimal legal value.

3) A EE.UU Ld. Is owned by 30% BVI IBC and 35% by Spanish SL and a 35% by Swiss individual.

Trading in Spain as non-resident in Spain:

a)     Tax rate of the EE.UULd in Spain: 65% of benefit at 35% rate

b)    Tax rate of the Spanish SL: 35% of benefit at 35% rate

c)     Tax rate of the Swiss individual: 35 of benefit at 5% rate

d)    Tax rate of the BVI IBC: 0%

4) UK Agent.

BVI IBC (non-resident in UK)Agency agreementUK Ld.

Tax rate in UK: bertween 5-10% commission for the serices.

5) FISCAL PLANNING IN THE SALE OF SHARES OF LIMITED COMPANY

Present situation:

Exposition of the sale of shares:

 As far as the aspect of the guarantee, it is fundamental to establish a cover of the payments to make, because in his majority they are going away to make of postponed form, at the rate of 3,500 eur/month As it were object of commentary in the meeting, would be basic to establish a banking endorsement by the amount of the amounts to perceive, being able to choose including by transmitting only a side of the shares but not it all property, or even incorporating a clause of resolution of the transaction of participation for the case in that some of the payments was not verified, or also of transmitting the participation to size in which the decided payments were made.
In any case, the optimal solution is the cover of banking endorsement, because it avoids later litigations and it frees the given debt from the underlying one, in this case the social participation. The economic aspect considers in the following terms: since an exemption of 42.84% of the capital gain exists to obtain, and on that number it is paid to 15%, the tax to pay in IRPF would be, value of sale of participation (29.350.000. -) less value of subscription including extension (4.000.000. - pts) = 25.350.000. - pts. This number is reduced in commented 42.84% and the result pays to 15%. This would throw a tax to satisfy in IRPF of 2.173.509. - pts. The average type of taxes would be of 8.574%.
The indicated economic exposition offers the problem of which it would be paying itself by a money that has still not been perceived, although the contributors could take refuge in the criterion of economic current of collections and payments, to be imputing the capital gain as this one went away perceiving. With this last one the benefit would be obtained to defer the payment, without modifying the numbers.

Proposed solutions:

In second term, also a contract of rent of the facilities can be celebrated, property of the present partners but in use of the company. For it, it is possible to formalize a crossing, to the next year at least from the date of the beginning of the renting. Since one would be a yield of the produced capital in real property in a period of generation irregular or superior to the year, it would enjoy an exemption of 40%. In a practical example, to perceive 2.000.000. - pts by this concept, would be computed respectively for each partner, by 600.000. - pts ( 1.000.000 -  40%). This resulting number would pay to the marginal type, that calculates around 18% (108.000. - pts). The result is better than in the exposition of sale of participation directly, in global estimation, since expenses of amortization are contemplated that until would in principle not have considered now.

The procedure to transfer the premises is an additional guarantee to banking endorsement, whereas it forces the renter to lend guarantee and makes depend the maintenance in the rent on the fulfilment of the rest on the assumed obligations. In the raised situation, combining the three factors of analysis, a could in summary be come: 1) Distribution of dividends, with exemption by double imposition. 2) Crossing of the premises of the activity, with reduction of the yields in a 40%. 3) Sale of the participation, deducing the amounts of dividend and crossing. Thus coming, instead of selling by 29.350.000. - pts the price of transmission would be (with the proposed example and for want of confirming the numbers after examination of the countable states) of 23.350.000. -, perceiving the rest by means of distribution of dividends and crossing.

Conclusions:

6) TAX REPORT OF PLANNING ON INVESTMENT ALTERNATIVES IN SPAIN

It has been seeming unquestionable that, for years, the general principle of the right that bucket that all we are equal before the law, is not real, because flagrant differences in the fulfillment of the tributary obligations based on the territory take place where the address is had. Still more, today the citizens of some regions have a fiscal pressure superior to their fellow citizens of the Community of Madrid, the Valencian Community or the Balearic Islands, to mention some, where certain taxes are legislated more favorably for their inhabitants at the time of fixing their contribution to the Public Property for the case of Donations or Successions. In particular, "law 7/2005 of 23 of December of administrative measures" approved by the Community of Madrid, supposes an advantage of the quota of the tax on Donations, in case these take place between parents and children. However, and like this one advantage can be understood, is only applicable if the passive subject of the tax, is to say the one that receives the donation, has the address in the own Community of Madrid. We are, consequently, before a fiscal model clearly much more beneficial for the citizens of Madrid that those of Catalonia for example, where, in addition, the Government of the Generalitat, is not in a any hurry to regulate the subject in conditions similar to those of the State Capital. Consequence of all the previous one, is the necessity to look for alternative at the time of planning possible donations or successions of familiar character, on the basis of the effective legislation, in the own conviction of the familiar saving, and under the principle of equality; in addition, it is clear that, it does not have no logic the exposed situation, that tolerates imbalances and disfunciones, clearly detrimental for the citizens of Catalonia or another regions.
 
After considering the regional particularitities of Spain, we presented/displayed a brief  EXAMPE report on investment alternatives, considering different tax  consequences if we invested like physical person, community of goods or company(SL, SA etc) without activity or company with activity

Present situation. Shortly, diverse members of a family group are going to altogether perceive an amount of 1.5 million Euros. This number probably will be invested, part in financial assets (actions or investment funds) and the rest in buildings. The members are contributors, real or potential, in the IRPF with types of taxes, due to the existence of yields of the work, non superior to 25%. Esteem that the annual yields can suppose a 10% of the investment. Exposition of the investment (it forms legal). The possibilities that consider are the following ones:

For a reason or purpose particular investment, like physical people. Investment in legal or corporate form. This option gathers three suboptions: community of goods, patrimonial society and society with economic activity. Advantages and disadvantages of each one of the expositions.

1.- Investment like natural person. She is simplest as far as the fulfillment of fiscal obligations, because the goods would be operated in the same way in which they are received. The responsibility in the operation of the goods supposes that the holders would respond with all their properties in possession and future, without some of the responsibility existed limitation. In principle, in a real estate activity of rent or transaction as important situations of risk do not take place as to prioritize the subject of the responsibility on other criteria like the financier-public prosecutor. Fiscally this option will suppose that yields of the capital in personal property (interest of accounts or dividends, as far as the investment in financial assets) and of the capital in real property will be perceived if real estate is rented. Based on the volume of the investment and taking into account that exists several members, the marginal types if we consider a yield of market for the number of 1.5 million Euros would suppose that the tax to pay by declaration of the rent would be located approximately in a 30%.

The personal minimum would consider, that would reduce to the base and therefore the amount to pay, circumstance that does not occur in legal people. This option would tolerate in addition to pay in the tax on the patrimony, around a 2% on the value of the investments. At the moment of the death of anyone of the members, the heirs would pay around a calculated 20% on the amount of the goods transmitted in the inheritance. In addition to the previous thing, the same physical people could obtain the yields through the exercise of an economic activity. This would suppose that the premises in exclusive right to the exercise of the activity would be due to contract a person to complete day and to destine, with the costs of wages and social security that it supposes.

The advantage would be that as soon as economic activity certain games would be deductible such as the indicated ones, and the goods would be not taxed as much in the tax on the patrimony like in the tax on successions and donations.

2.- The community of goods is exactly just as the exercise by the members, with the circumstance that such goods would be enjoyed in a joint regime.

3.- Corporate-Society. Activity or not activity

The first case would correspond with the one of a society of  possession of goods, that is to say, patrimonial. It would be described to the patrimonial society as having for more than 90 days of the exercise more of 50% of his goods nonaffection to the development of an economic activity. Any type of exemption would not exist, and a 15% by the gains with period of accrued income would be paid to 40% by the yields devengados in the exercise (mainly I interest and rents) and superior to the year. One would also pay as far as successions and donations and as far as patrimony just as in the assumption of physical people.

This option cannot be interesting for the raised case, since it would be paid more (40%) than in rent of physical person; and if one gambles to obtain patrimonial gains of accrued income superior to the year, for that he would be preferable to obtain them like physical person. The only comparative advantage with the option of physical person would be the responsibility, that is limited the goods contributed to the society, although since it has commented not it deals with a sector with special criteria of risk in his activity. Another problem of the legal form would be the negative financial effect that is derived from the taxes to pay at the moment for making the contributions to constitute the society, that in the case of the VAT could be recovered gradually.

The previous option can be improved introducing the element of society dedicated to an economic activity. It can be obtained with the circumstance already commented and compares to the option of physical people to contract a person to complete day at least and to destine the premises in exclusive right for the exercise of the activity. Based on the volume of business and its yield it would be necessary to consider this possibility. Fulfilling the conditions referred, the society would pay, independently of how their income took place, to 30% by the first 120,000. - Euros and to 35% by the rest. Deductible games would exist that would reduce the base on which these percentage are applied. The most important advantage is that for the partners physical people, the possession of participation in a society like the described one, with economic activity, it does not imply to have to pay by the tax on the patrimony nor to its heirs  as far as the tax on successions and donations. This possibility is important at the time of planning the succession.

As far as the distribution of the result (dividends) between the partners, a deduction by double imposition of the perceived amount would exist, that would locate in great advantage to the received amounts. In this option if that would be to pay the costs of constitution of the compnay, through VAT (recoverable with some considerations like ) or ITP. A suboption to the one of the previous paragraph is the consideration of society with activity of the rent of real estate. The practical consequences are basically equal, and the great difference is that 85% of the tax basis or the volume of the benefits, would be free. For it it is necessary to fulfill quite demanding requirements (80% of the assets of the company at least must be constituted by floors in rent regime, and one is due to include such in an option of purchase for the renter, who could not be a relative; and the assets could not be conformed by less than ten houses). The rest of considerations is equal to the described ones for any society with economic activity.

 Conclusions:

Based on the data with which the exposition has been constructed, it seems that the most logical for an investment to midium/long term would be to constitute a society to which dowry of economic activity, fundamentally by the attainment of exemptions in the tax on the patrimony and the one of successions and donations. Also to limit the responsibility the goods contributed to the activity. However, if which is is solely to buy and to sell buildings, with a term of maneuver superior to the year, it would be necessary to make calculations to know if the tributación like physical person is preferable.
Taxed 1.5 euros million in a :

A) PERSONAL view Or COMMUNITY OF GOODS - 150,000 annual Rent 10% or eur

COMPANY  with trading activity

– Corporate Tax: 30% (120,000 eur) = 36,000 + 35% (30.000) = 10,500, total: 46.500 annual total....................................................................................... 46,500 EUR IT IS NOT HOLDS To TAX OF IMPOSED PATRIMONY NOR SUCCESSIONS

7) Acquisition of a Spanish company by another Swedish.

 The Swedish buyer wants to be deduced in its country the part of the satisfied price that exceeds the countable value of the Spanish company (financial goodwill)

 Solutions:

a) Swedish society PURCHASE SHARES DIRECLYT to  Spanish Society There is no deduction possibility It harms the Spanish partners (could not apply the integration of the amount of the tax paid by the company in his IRPF)
 b) FUSION of companies. It is not feasible
 c) RECOMMENDED
 1. - Swedish Society INCORPORATE a Branch in Spain
 2. - The Branch PURCHASE  a Company “TARGET”