Many of our international clients ask the same question:
“Do I need to set up a company in Spain to rent out my property, or can I rent as an individual?”
The answer is no—you do not need to create a company in Spain to carry out rental activities.
In fact, there are several legal structures you can choose from depending on your investment goals, your country of residence, and the scale of the activity. Below, we break down each option and its tax implications.
1. Renting as a Natural Person (Individual)
This is the most common and simplest option, especially for small investors or individuals renting out one or two properties.
You may purchase the property in your personal name and rent it out without setting up a company.
The rental income will be subject to Personal Income Tax (IRPF), either as:
Resident (if you live in Spain more than 183 days per year), or
Non-resident (if you live abroad but own property in Spain).
What tax rate applies?
19%: for EU, EEA or countries with a double taxation agreement (e.g., UK residents post-Brexit under specific conditions).
24%: for non-EU/EEA residents.
You may deduct certain expenses only if you’re an EU/EEA resident. Otherwise, non-residents outside the EU cannot deduct any expenses.
2. Renting Through a Non-Resident Legal Entity (Without Permanent Establishment)
If you already have a company in your home country, and you wish to own a Spanish property through that company, you can do so without setting up a local branch or company in Spain.
The property can be purchased in the name of the foreign company.
The rental income will be taxed in Spain through the Non-Resident Income Tax (IRNR).
What tax rate applies?
19%: for companies based in the EU.
24%: for non-EU companies.
Advantages:
Lower tax rate than Spanish Corporate Tax (25%).
Lower running costs (no need for Spanish bookkeeping or payroll).
Disadvantages:
Very limited expense deductions (only proportional to the days the property was rented).
Can be harder to access local financing or apply for tourist licenses in some regions.
3. Renting Through a Foreign Company With a Permanent Establishment in Spain
If you plan to develop a rental business at scale, or intend to operate with local staff, offices, or infrastructure, you may set up a permanent establishment (PE) in Spain.
This means:
Registering a Spanish branch or delegation of your foreign company.
Operating with separate accounting and legal obligations for your Spanish activities.
Tax implications:
The income will be taxed under the Spanish Corporate Tax (Impuesto de Sociedades).
Standard tax rate: 25%.
You can deduct all ordinary business expenses, including property maintenance, staff salaries, depreciation, marketing, etc.
Suitable for companies planning long-term investment, property portfolios, or management structures in Spain.
4. Creating a New Spanish Company (SL or SA)
If you want to keep your Spanish investment legally and financially separate from your main business or personal assets, you can create an independent Spanish company.
The most common legal forms are:
SL (Sociedad Limitada) – equivalent to a Limited Liability Company.
SA (Sociedad Anónima) – equivalent to a Public Limited Company.
This is ideal for:
Investors managing multiple properties.
Companies involved in tourist rentals, renovation and resale, or property development.
Businesspeople looking to build a local operation with staff and infrastructure in Spain.
Tax implications:
Subject to Corporate Tax at 25%.
All business-related expenses can be deducted.
Unlike a branch, a Spanish SL or SA is a fully independent legal entity, offering greater flexibility and legal separation from your main business.
Can I Mix Structures?
Yes. Spanish law allows for flexible ownership combinations, such as:
Buying 50% in your personal name, and 50% through your company.
Holding the usufruct (use rights) personally and the bare ownership through a company.
Co-owning with family members or through a trust or holding company.
Each option has distinct legal and tax consequences, so it’s vital to assess your structure with a qualified advisor.
Conclusion: Renting Without a Company Is Possible (and Often Advisable)
To summarize:
You don’t need to create a company to rent property in Spain.
Natural persons can buy and rent properties directly.
If your operation becomes more complex or grows in scale, you may consider corporate structures.
Each option has specific tax rates, compliance obligations, and deductibility rules, so choosing the right model from the beginning will help you optimize taxation and reduce legal risks.
Need help deciding which model fits your investment goals?
Our legal and tax advisors will guide you through every step—from choosing the structure to registering and filing your taxes in Spain.