Is it legal to have a second residence in the name of a company?

Is it legal to have a second residence in the name of a company?

Experts say that it is an "absolutely legal" practice if it is properly taxed and that it "does not represent a saving" in terms of taxes paid

  The luxury villa that Minister Pedro Duque has in the Alicante town of Jávea is under magnifying glass. According to "OK Diario" this morning, the head of Science, Innovation and Universities supposedly put this second residence in the name of an instrumental company to avoid paying taxes. The woman of the minister also appears as a joint administrator with him, of a patrimonial society that does not have hired personnel and is destined solely to the administration of patrimonial goods.

  After knowing the information, the Ministry of Science has indicated that this fact "does not constitute illegality and any irregularity." The Duke himself at a press conference explained that at the time they "recommended" the creation of this heritage society and found it advantageous to be people "who live a long time outside of Spain." The minister has categorically denied that they have billed income in the company corresponding to natural persons, something that he himself knows to be "illegal".

On the other hand, the Minister of Finance, María Jesús Montero, explained this morning in an interview on TVE that the legality of Duque's house depends on the use of society , on "how this figure was used". He has pointed out that he has no data about it for now.

«It does not mean much savings»
The experts consulted agree that the basic difference between registering an address in the name of a natural or legal person resides in the taxes affected. In the case of putting a house in the name of a company, there is a saving on personal income tax, since individuals must be taxed for the fact of having a second home by paying a percentage of their cadastral value.

They will therefore have to pay the patrimonial taxes, not IRPF because their address in Jávea is in the name of the company Copenhague Gestores de Inmuebles SL. However, "if it has been well taxed, it would not be much saving", explains the president of the Spanish Association of Tax Advisors, Adolfo Jiménez. Because this company does not sell anything or live on it, the partners would have to allocate 5% or 10% of the cadastral value as returns : "If they pay in this way, it is absolutely legal," says Jiménez. And the minister has clarified it in this sense also: "He advised me sufficiently and I have paid all the taxes I had to pay".

Problems with the «auto-rental»

Along the same lines, Luis del Amo, secretary of the Registry of Tax Advisors (REAF), has said that it is "legal provided that it is paid well", although in his opinion "it does not make much sense" to do something like this if they pay all the taxes, since "it does not suppose any significant saving". The expert explained that rent should have been put "at market prices". Asked about this matter, Duque has assured that they have satisfied that "auto rental". However, the accounts of your company in the last three years (2015, 2016 and 2017) reflect zero euros of turnover in those years . The minister himself has indicated that «the only turnover that his company has had» has been «when we both rented the house to someone».

Abel Garcia has described the strategy of using a society as a "normal" home for "Life", but assures that from a fiscal point of view, "there is no illegality, only bad planning", since he could be paying even "more taxes" in this way.

The difference of this case with that of the former minister Máxim Huerta is that in his case the Tax Agency and the courts of Justice sanctioned him for having used the company to invoice through it the income that he personally obtained.