Philip Harrison
Lanzarote Property Sale
Spanish Capital Gains Tax Report

The Company: Los Romeros Limited

The Property

Ownership Timeline

When a non-resident sells a property in Spain, the Spanish government charges a tax called IRNR (Impuesto sobre la Renta de No Residentes) — Non-Resident Income Tax. This is Spain’s equivalent of Capital Gains Tax for foreign property owners.

Step 1 — At the Notary on Completion Day (Modelo 211)

The buyer’s solicitor automatically withholds 3% of the sale price and pays it directly to AEAT within 30 days. This is not the final tax — it is a deposit held by Spain while Philip’s full return is processed.

Step 2 — Within 3 Months of Sale (Modelo 210)

Philip must file a tax return called Modelo 210 with a Spanish tax agent (asesor fiscal). This shows the actual sale price, all allowable deductions, the true taxable gain, and the final tax owed at 19%.

Company Acquisition Cost Base (2010 Aumento de Capital)

The company acquired the property in 2006 for €175,000, but the capital was formally increased and notarized in 2010.

Costs of Selling the Property (Estimated)

Flood Repair Costs (Estimated, Net of Insurance)

Philip personally paid for flood damage repairs caused by a water pipe problem over the last two years. Only the net cost after the insurance claim is deductible. Furthermore, only capital improvements (e.g. replacing pipes with new infrastructure) qualify — not simple maintenance (e.g. repainting).

Final Estimated CGT Calculation

Note: If AEAT challenges the 2010 Aumento de Capital and forces the 2006 base cost (€175,000), the taxable gain rises to ~€115,880, generating a total tax of ~€22,017 (meaning a balance due of ~€12,567).

Director’s Loan Account — Money the Company Owes Philip

The annual accounts for Los Romeros Limited (filed at Companies House every August) show a Director’s Loan Account. This is money Philip has personally put into the company over the years to cover running costs — accountancy fees, Companies House fees, insurance, and any property costs he paid personally. The company legally owes this money back to Philip.

Investment Property in the Accounts

The property has been carried at £159,634 in every year’s balance sheet — unchanged. This is the original GBP cost basis when the company first acquired it. This figure is for UK accounting purposes only and does not affect the Spanish CGT calculation.

Post-August 2025 Repair Costs

Since the accounts run 1 September to 31 August, any costs Philip paid after 31 August 2025 fall into the 2026 accounting year. These should appear in the 2026 accounts — the final accounts before the MVL wind-up. Philip should provide his accountant with:

• A complete list of every personal payment made for the property after 31 August 2025
• Bank statements or receipts to support each entry

Every pound added to the Director’s Loan Account is recovered tax-free at wind-up.

This report focuses on the Spanish CGT. Once the sale proceeds land in Los Romeros Limited’s bank account, there are further UK steps to navigate.

A — Immediate Priority (Before Sale Completes)

• Locate the 2010 Aumento de Capital documentation — the Spanish deed establishing the €231,164.73 valuation. This is the single most important document to defend the higher base cost.
• Gather all historical purchase receipts — Notary invoices, Land Registry fee receipts, and gestoría invoices from 2006 and 2010.
• Collect all flood repair receipts and invoices — every payment Philip made personally for the water pipe flooding work. Separate his personal outlay from what the insurance covered.
• Obtain the insurance claim settlement documents — shows exactly what the insurer paid out, confirming Philip’s net personal outlay (the only deductible amount).
• Instruct a Spanish asesor fiscal (a registered tax agent with an AEAT digital certificate) — required to file both the Modelo 211 (completion day) and the Modelo 210 (within 3 months of sale). They must be briefed on the corporate ownership structure and the 2010 Aumento de Capital.
• Confirm the Plusvalía figure with the Yaiza (Ayuntamiento) Town Council before or at completion — it must be paid within 30 days of the sale date.
• Open an account with a specialist FX broker (Currencies Direct or TorFX) before the sale completes — do not use a high-street bank for the Euro-to-GBP conversion.

B — Within 3 Months of Sale Completing

• File the Modelo 210 with the Spanish asesor fiscal — declare all deductions and pay the estimated balance (~€8,239).
• Pay the Plusvalía Municipal tax to the Yaiza Ayuntamiento within 30 days of the completion date.
• Place a forward FX contract on the AEAT refund amount if applicable — the refund takes 6–18 months and the EUR/GBP rate could move unfavourably in the meantime.

C — UK Company Actions After the Sale

• Provide the accountant with a complete list of all personal payments made for the property after 31 August 2025 (with bank statements) — to be added to the Director’s Loan and recovered tax-free at MVL.
• Instruct a UK Chartered Tax Adviser (CTA) to file the Corporation Tax return (CT600) applying Foreign Tax Credit Relief to offset Spanish tax paid against the UK tax liability.
• Instruct a licensed Insolvency Practitioner to administer the Members’ Voluntary Liquidation (MVL) of Los Romeros Limited — the most tax-efficient method of extracting the net proceeds.
• Review Philip’s Will and estate plan with a STEP-registered Private Client Solicitor once cash lands in his personal account after the MVL — particularly the IHT position.