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Tax inspection plan on holding companies owning dwellings

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11 May 2016

The Malaga Tax Office has launched for its third consecutive year a tax investigation plan on companies holding properties. The purpose of the campaign is first to find out if the properties are being used by partners or any other related parties, or they are at their disposal (not rented out to third parties, nor on the market for sale). Secondly, to check if the company has declared a fair market rental income, and to regularize the revenue in case the price is lower or non-existent. Thirdly, to adjust the costs declared as per the market conditions (consumptions are normally paid by tenants). The result would likely lead to make profit and pay Corporate Income Tax on it.

Additionally, the tax inspection may also qualify as dividends the difference between the fair market rental price and the price declared or paid. Those dividends are subject to withholding tax at source which tax rate depends on the Double Tax Treaty applicable, if any.

The new tax inspection plan has spread the scope to any property with a cadastral value above 1 million Euros.

The years under investigation are from 2011 to 2014.

For more detailed information please check the following link:

JC&A UPDATE REPORT 02.16

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