Buying a Property in Mallorca Through a Company or in Your Own Name: Which is Right for You?

One of the questions that comes up regularly with buyers considering a property in Mallorca — particularly those purchasing at the higher end of the market, or those who already own property through corporate structures in their home country — is whether to buy in their personal name or through a company. It is a legitimate question with a real answer, and the answer in 2026 is more nuanced than it might appear.

The short version is this: for the majority of buyers purchasing a property in Mallorca for personal use — as a primary residence, a holiday home, or a combination of the two — buying in a personal name is simpler, cheaper over the long term, and typically more tax-efficient. For a smaller group of buyers with specific circumstances, purchasing through a Spanish limited company — a Sociedad Limitada, or SL — can offer genuine advantages. Understanding which group you belong to is what this guide aims to help you work out.

Buying in Your Personal Name: The Default and Usually the Right Choice

Buying in a personal name is the straightforward route. You obtain your NIE — the Número de Identificación de Extranjero — open a Spanish bank account, sign the purchase deed before a notary and register the ownership at the Land Registry. The process is well understood, well established, and applies to the vast majority of international property transactions in Mallorca every year.

For a non-resident buying in their personal name in 2026, the purchase taxes in the Balearic Islands apply on a tiered scale. For resale properties — second-hand property bought from a private seller — the Impuesto de Transmisiones Patrimoniales applies at 8 percent on the first 400,000 euros of value, 9 percent on the portion between 400,000 and 600,000 euros, 10 percent between 600,000 and one million euros, 12 percent between one million and two million euros, and 13 percent on any portion above two million euros. For new properties from a developer, IVA of 10 percent and stamp duty of 1.5 percent apply instead. On top of the purchase taxes, buyers should budget for notary fees, Land Registry fees, and lawyer's fees — in total, approximately 10 to 14 percent of the purchase price.

Once owned, a non-resident property owner in Spain is subject to an annual imputed income tax even if the property is not rented out. This reflects the theoretical income the property could generate and is calculated on 1.1 or 2 percent of the cadastral value of the property — a figure that is typically considerably lower than market value. For most properties in Mallorca, this results in a modest annual tax burden. Non-residents must file Form 210 annually to declare this.

If the property is rented to long-term tenants or to tourists with a valid ETV licence, rental income is taxed for non-EU non-residents at a flat rate of 24 percent. For EU and EEA residents, the rate is 19 percent and allowable expenses can be deducted from the taxable income — mortgage interest, community fees, insurance, maintenance and management costs. This deductibility of expenses for EU residents has made personal ownership considerably more attractive than it was in earlier years, when non-residents could not deduct expenses at all.

Buying Through a Spanish SL Company: When It Makes Sense

A Sociedad Limitada is Spain's equivalent of a limited company. Setting one up requires a minimum share capital of 3,000 euros, registration with the Spanish Commercial Registry and ongoing obligations including the filing of annual accounts, payment of corporate tax, and maintenance of a registered office address. The annual cost of maintaining an SL — accountancy, tax filing, registered address — typically runs to approximately 1,500 euros per year at the minimum.

Corporate tax in Spain is currently 25 percent on net profits. This is marginally higher than the 24 percent flat rate that non-EU non-residents pay on rental income from personal ownership. However, the key difference is what counts as "net": an SL can deduct all legitimate business expenses — mortgage interest, maintenance, management fees, insurance, cleaning, utilities and professional fees — from its taxable income before the 25 percent rate applies. For a property generating significant rental income with correspondingly significant running costs, this deductibility can make the SL structure more tax-efficient than personal ownership for non-EU buyers.

The SL structure also offers limited liability protection. The company's assets are separate from the personal assets of its shareholders, which means that legal claims or debts connected to the property cannot automatically reach the personal wealth of the owners. For buyers with substantial personal assets who are operating the property commercially as part of a rental business, this separation can have real value.

A third situation where an SL can be beneficial is when the buyer already owns a limited company in their home country that holds funds they wish to invest in Spanish property. Rather than extracting the funds personally and paying income tax before using them to purchase in a personal name, the home company can invest in a Spanish SL that then acquires the property. This is a specific corporate structuring exercise and requires specialist advice in both the buyer's home jurisdiction and in Spain, but it is a legitimate and relatively common structure for high-value commercial property investments.

The Capital Gains Difference

One of the historical arguments for the SL structure concerned capital gains tax on sale. Non-resident individuals selling Spanish property were historically taxed at 35 percent on capital gains. A Spanish SL, being a Spanish entity, is treated as a Spanish resident for tax purposes and pays corporate tax at 25 percent on profits — the same rate as any other Spanish company. The buyer retains 3 percent of the sale price as a withholding tax against the seller's capital gains liability in both cases, but the applicable rate differs.

For EU and EEA residents selling in a personal capacity, capital gains tax on Spanish property is now 19 percent — which is lower than the corporate rate. Non-EU non-residents selling personally pay 24 percent. The gap between personal and corporate rates has narrowed significantly, which has reduced the capital gains argument for the SL structure in most cases.

There is also the question of selling the company itself rather than the property. If a buyer holds a property through an SL and a buyer wants to acquire the property, they can in principle buy the shares of the SL rather than the property itself. This approach can be more tax-efficient in some circumstances because the transfer of shares in a company is not necessarily subject to the same purchase transfer taxes as a direct property acquisition. However, buyers purchasing shares in an SL inherit all of the company's liabilities as well as its assets — meaning careful due diligence on the company's history is essential — and not all buyers are willing to take on this structure.

The Inheritance Planning Angle

Before the Balearic government introduced its current inheritance tax reforms, one of the main arguments for using an SL structure was inheritance planning. Passing shares in a company to heirs was argued to be simpler and potentially less expensive than inheriting property directly. Since the Balearic Islands introduced a 100 percent inheritance tax exemption for children, spouses and parents in 2023, this argument has largely dissolved for the most common family succession scenarios. Direct inheritance of Mallorca property by children and spouses now carries no inheritance tax cost, which removes one of the primary historical justifications for corporate ownership.

The Clear Cases: When to Choose Each Structure

Based on the current legal and tax landscape in 2026, the following guidelines reflect the situations where each approach tends to be most appropriate.

Personal ownership is generally the right choice for buyers purchasing a Mallorca property for personal use as a primary or secondary residence; for buyers who intend to rent the property occasionally to supplement costs but are not running it as a commercial business; for EU and EEA resident buyers, who benefit from the most favourable personal tax rates and expense deductibility; for buyers whose heirs are direct family members who will benefit from the Balearic inheritance tax exemption; and for buyers who want simplicity and want to avoid ongoing company maintenance costs and compliance obligations.

An SL structure is worth serious consideration for non-EU non-resident buyers with high-value properties generating substantial rental income on a commercial basis; for buyers who are investing through an existing corporate structure in their home country and wish to avoid personal extraction of funds before investing; for buyers with significant personal assets who want legal separation between the property and their personal wealth; and for buyers who anticipate holding multiple properties in Spain and wish to manage them through a unified corporate entity. The threshold at which an SL begins to make financial sense is widely suggested to be properties above approximately 300,000 euros in value where the owner has no intention of becoming a Spanish resident.

Get the Advice Before You Buy

The decision between personal and corporate ownership has real financial consequences that extend across the full lifecycle of the property — purchase costs, annual running costs, rental income tax, capital gains on sale and inheritance. It is a decision worth making carefully, with qualified Spanish legal and tax advice, before the purchase is completed rather than after. Restructuring ownership after the fact is possible but involves significant additional cost and complexity.

Imperial Properties works with a network of trusted Spanish lawyers and tax advisers who can provide exactly this advice, tailored to your specific circumstances, nationality, residency and investment objectives. We are happy to arrange introductions as part of the property viewing and purchase process. Visit www.imperial-properties.com or contact our team directly.

Note: This article provides general information only and does not constitute legal or tax advice. Tax rates, rules and regulations change and depend entirely on individual circumstances. Always seek personalised advice from a qualified Spanish lawyer and tax adviser before making any decisions.