Are you considering buying your apartment or villa in Spain not in your own name, but through a company (Sociedad Limitada, or SL)?
It sounds appealing: you enjoy limited liability, you can deduct expenses and maybe even save on taxes.
Yet for most second-home buyers this is rarely the smartest option. The Spanish tax authorities quickly classify an SL without real business activity as a sociedad patrimonial. And that label comes with important disadvantages.
What is a Sociedad Limitada (SL)?
A Sociedad Limitada (SL) is the Spanish equivalent of a private limited company (similar to a BV/SRL).
- Shareholders are only liable up to the amount of their contribution.
- It is the most popular company form for small and medium-sized enterprises.
- Profits are subject to corporate tax (25%).
For entrepreneurs this feels familiar and safe. That is why foreign buyers sometimes consider purchasing their Spanish property through an SL.
When does an SL become a sociedad patrimonial?
According to the Ley del Impuesto sobre Sociedades (LIS, art. 5), a company is classified as a sociedad patrimonial when:
More than 50% of its assets consist of items that are not linked to an economic activity.
In practice:
- An SL that only owns real estate to live in or to rent out without staff or additional services will almost always be considered a sociedad patrimonial.
- An SL that mainly invests in shares or bonds also falls under this definition.
It is therefore about the composition of the assets, not about the turnover.
What changes fiscally if your SL is patrimonial?
- Corporate tax
The standard rate of 25% continues to apply.
However, patrimonial companies lose access to certain incentives and reduced rates that are reserved for active businesses.
- Expenses and depreciation
You may deduct maintenance, interest and depreciation.
But: on resale this can backfire. Depreciation reduces the book value, which increases the taxable capital gain.
- Double taxation on profit distribution
First, the company pays 25% corporate tax.
When profits are distributed to shareholders, a further 19–26% dividend tax applies (depending on your tax residence and treaties).
- No exemption on the sale of a main residence
The exemption that individuals may enjoy when selling their main home does not apply to an SL/SP.
- Closer scrutiny by the tax authorities
The Spanish tax office monitors private use of company-owned property, shareholder loans and other “grey areas” very closely. Errors or abuse can quickly lead to fines and reassessments.
What are the advantages of a property SL?
Despite these limitations, there are a few advantages:
- Limited liability: your private assets are shielded.
- Structure and clarity: convenient if you own multiple properties or projects.
- Estate planning: transferring shares in an SL can be simpler than transferring property directly.
Why is an SL usually not a good idea for a second home?
For most second-home buyers – who typically purchase one property or perhaps two – the disadvantages outweigh the advantages.
- You often pay more tax due to double taxation.
- You lose exemptions that you would still benefit from as a private individual.
- You face stricter controls and more administration.
In other words: if you buy an apartment or villa as a second home or for occasional rental, private purchase is usually the better option.
When can a sociedad patrimonial still make sense?
For many Dutch and Belgian entrepreneurs, a company structure seems like the logical choice.
In their home countries it is common practice to set up a BV/SRL for holding real estate. This allows them to deduct expenses, limit risks and sometimes optimise taxes.
In Spain, however, the tax authorities take a stricter approach to companies that only hold real estate, and these are often classified as sociedad patrimonial. Still, a property SL can make sense in specific situations:
- Investors with multiple rental properties who want to protect their private assets.
- Entrepreneurs used to structuring through companies, and who are willing to accept the additional tax burden and administration in exchange for clarity and separation of assets.
- Owners focused on inheritance or estate planning who prefer to transfer shares rather than the property itself.
These remain exceptions. For the typical second-home buyer, the disadvantages usually outweigh the benefits.
Conclusion
For most second-home buyers in Spain, an SL is not a tax advantage but rather a pitfall.
If you are purchasing a property to enjoy yourself or to rent out occasionally, then buying in your own name is usually simpler, cheaper and safer.
Only those building a larger property portfolio or pursuing specific estate planning strategies may benefit from a sociedad patrimonial.
Our advice: always seek personalised guidance from a specialised tax lawyer or gestor before deciding to set up an SL.