At Navas & Cusí, we face legal challenges that demand innovative solutions to ensure compliance with tax and commercial regulations in international transactions. Recently, we tackled a case involving the acquisition of land in Catalonia by Syrian clients, represented by a construction company based in Athens. Their goal was to develop housing on the acquired land, with the ultimate aim of granting Golden Visas in Spain to future property owners. The total transaction value for the land acquisition and construction work amounted to €1,600,000.
The uniqueness of this case lay in the need to separate the operations of the Greek parent company from the transactions in Spain. Our clients chose to avoid establishing a subsidiary in Spain and sought to distance these operations due to the inherent risks in the construction sector, aiming for complete independence between activities.
One of the main obstacles was the impossibility of charging VAT on the sale of the land, as there was no corporate structure supporting this transaction in Spain. The absence of this entity complicated the request for VAT refund since the operation was subject to paying this tax, given that it was a sale made by a commercial entity.
After careful analysis of alternatives, an innovative strategy was devised to meet tax requirements: the creation of a community of property. A community of property is a legal concept where two or more individuals agree to share ownership of a common asset without creating a separate legal entity. Each participant holds a share of the asset, eliminating the need to establish a separate legal entity, which simplifies management and provides flexibility in decision-making. The benefits include a streamlined structure and the ability to engage in commercial transactions, such as in the present case, where private sales contracts can be formalized to demonstrate the commercial nature of an operation.
Establishing a community of property among our clients to acquire the land allowed for the execution of private sales contracts with future property buyers. This approach demonstrated to the tax authority the commercial nature of the operation. Several elements supported this assertion:
- Acquisition of the construction license: The purchase of the land included the construction license, demonstrating the commercial intent to undertake a real estate project.
- Contract with the construction company: Our clients entered into a contract with a construction company, validating a specific real estate development plan.
- Private sales contracts: To solidify the commercial nature of the transaction, private contracts were executed between our clients and their buyers, establishing sales commitments for the future apartments.
This strategy enabled the validation of the commercial nature of the operation before tax authorities, allowing for the request for a refund of the VAT paid on the land acquisition.
At Navas & Cusí, we stand out for offering detailed and personalized legal solutions tailored to the complexities of International Law. We understand the importance of meticulous and specialized legal advice. If you are seeking exceptional legal guidance in the field of international investments and trade, our International Law specialists are here to assist you. Trust in our experience and expertise to successfully navigate your international transactions.
If you are looking for specialized legal advice for national or international commercial operations, do not hesitate to contact us.
This article provides a practical example to illustrate legal strategies applied in specific situations while preserving confidentiality by omitting specific details. It is essential to consider that each case is unique and requires a thorough analysis by specialized legal professionals.
