Buying Property Through an SL: Is the Company Structure Worth It?

The agent shows you the 2 million euro villa and adds one line: buy the house through a company, it saves on tax. It sounds like an insider tip, but in most cases it is not true. If you buy property through an SL, you pay exactly the same tax on the purchase itself, and in exchange you take on ongoing bookkeeping and tax obligations a private buyer never has. This article works through what a Sociedad Limitada actually does for a property purchase on Mallorca, and where it ends up more expensive than buying directly.

A Sociedad Limitada (SL) is a Spanish limited company, comparable to a German GmbH or a UK limited company. If the SL buys the property instead of you personally, the house legally belongs to the company, with its own tax obligations, its own bookkeeping and its own filing deadlines at the Registro Mercantil.

Why the agent suggests a company

The most common reason for the tip is a misunderstanding. The transfer tax (ITP) applies in Spain to the purchase of a property regardless of whether the buyer is a private person or a company. If you set up a new SL and have it buy the villa, the SL pays exactly the same ITP you would pay privately.

The other route is buying the shares of a company that already owns the house, instead of buying the house itself. Spain's tax authorities have been closing this loophole for years: Article 314 of the Securities Market Law taxes such a share purchase as if it were a direct property purchase whenever the authority identifies an intent to avoid tax, for example because property makes up most of the company's assets. So the detour through shares is not a reliable workaround.

Three points an agent rarely mentions:

• ITP applies to a purchase through an SL in exactly the same way as to a private buyer.
• Buying the shares of an existing property-holding company can still be taxed as a property purchase.
• The SL's running costs (gestoria, bookkeeping, annual accounts) apply regardless of any tax benefit.

What the SL actually costs on the purchase

In the Balearics, ITP is tiered for 2026: 8 percent up to 400,000 euros, 9 percent up to 600,000 euros, 10 percent up to 1 million euros, 12 percent up to 2 million euros, and 13 percent above that. For a property priced at exactly 2 million euros, the tiers add up to around 210,000 euros in ITP, whether a private person or an SL buys. You'll find more on the full purchase process in the guide to buying property on Mallorca.

Living in it yourself: why the tax office takes a cut

If you live in the house your SL owns without paying rent, the Spanish tax authority treats that as a disguised profit distribution to you as the shareholder. The SL has to account for the property as if it had rented it out at market rate, and you then pay income tax on that notional rental value. At the same time, the company cannot deduct maintenance, insurance and property tax costs as business expenses, because the house serves no commercial purpose. The result: you pay tax on rental income you never actually received, and the SL cannot offset the costs against it. How your own general tax liability in Spain looks also depends on how many days a year you spend on Mallorca.

Sale: the double tax many people overlook

If you sell the property as a private individual, you pay tax on the gain once, as part of your personal income tax. If the SL sells the same property, the company first pays 25 percent corporate tax on the gain. If you then want to move that money into your personal account, the SL has to pay it out as a dividend, and that dividend is taxed again at your level as the shareholder. Added together, you end up paying more tax than you would have on a direct sale, even though the corporate tax rate looks lower than personal income tax at first glance.

When the SL genuinely pays off: licensed rental

It looks different when the property is actually rented out, for example with a tourist rental licence managed professionally. Here the SL carries out a genuine economic activity and can deduct costs for management, cleaning, maintenance and depreciation against the rental income. In the end it pays 25 percent corporate tax on the actual profit. With high rental income, that can work out cheaper than the progressive income tax a private person pays, which climbs to as much as 47 percent at the top end. What matters is that the rental runs continuously as a business and the house is not used privately in between, otherwise the tax logic tips back into the disguised distribution described above.

Does an SL really save tax on a property purchase on Mallorca? Not on the purchase itself: ITP applies the same way to a private buyer and to a company. A real advantage only appears with genuine, licensed rental run through the company, not with pure personal use or on a sale.

The legal basis for corporate tax and the special tax for companies is set out in these official sources:

Bottom line

An SL is not a tax trick for buying property, it is a business vehicle with its own obligations. For the villa you live in yourself, it usually just adds cost and triggers a disguised distribution on use. It genuinely makes sense once the property is run as a business, with a licence, management and real rental income. Work through both options for your own budget in concrete numbers, ideally together with a tax advisor who knows both countries, before the notary date is set.