Spanish vacation properties as a tax trap

In Spain in particular, but also in other popular regions, (vacation) properties are often not held directly, but through a corporation. However, the shareholders must pay an appropriate rent to the company for the use of “their” property. Otherwise, their private use constitutes a taxable hidden profit distribution. The Federal Fiscal Court confirmed this again in a decision from October 2024, but at the same time clarified that the mere possibility of using the property is not harmful. Dr. Michael Feldner explains what to look out for if the (vacation) property is to be held via a corporation so that the intended tax-saving model does not become a tax trap.