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So far Fitzwilliam has created 27 blog entries.

How are mortgages created and perfected in Spain? Is it possible to grant an equitable mortgage (that is, a valid and enforceable mortgage even if formalities have not been complied)?

Granting a Mortgage in Spain 

A mortgage is the most secure and comprehensive form of security as regards real estate assets in Spain. A lender will usually prefer to take a mortgage over real estate, notwithstanding its value, as it gives the best protection against other below ranked interests. 

When granting a mortgage over real estate property located in Spain, the Spanish legislation must apply to the security itself, this is not subject to contrary agreement by the parties.  

Pursuant to the Spanish legislation a mortgage would only be valid and enforceable if:  

  • Executed before a notary public in a public deed; and 
  • Filed and registered with the land registry where the real estate property is located. 


Treatment to unregistered mortgages in Spain  

Any mortgage already granted before a notary public but not registered within the Land Registry   is rendered as invalid and unenforceable. That is, no equitable mortgage or similar will ever be recognised under the Spanish legislation, neither on insolvency or against any other creditors or the debtor itself. Nonetheless, no registering of the mortgage at the Companies House is required whatsoever.


Equitable Mortgages in the UK 

Overall tighten of the Spanish legal system contrasts sharply with granting a mortgage pursuant to the laws of England and Wales, where an unregistered mortgage usually takes effect as an equitable mortgage. An equitable mortgage, if existing, does only transfer a beneficial interest in the asset to the mortgagee with legal title remaining with the mortgagor. However, any mortgage or charge over real estate granted by a UK company or LLP must be registered at Companies House in the 21-day period immediately after the security is created, otherwise it will be void on insolvency and against other creditors. 

2017-12-30T16:23:07+00:00 4 November, 2017|

Tech and Real Estate, thriving sectors for Direct Lenders and Private Equity Investors


Secured loans remain the global predominant source of funding for companies. Nonetheless, it is difficult to ignore that there has been a significant change in the way companies access funding since the financial crisis, moving from traditional banking institutions to more attractive and flexible means to finance. 

While traditional banks still play an essential role in the loan market, direct lenders and private equity funds and activity in Spain is notably prominent. The rise of these alternative finance providers has become particularly popular among lower mid-market players. Such an increasing interest represent excellent news for lenders given the fact that it is in the lower mid-market rather than among the biggest companies, that deals with the highest return potential are to be found.  

The small and mid-market is quite broad, with a huge range of investment opportunities. There clearly exist a large number of companies with huge growth potential but that are not currently broadly known among investors. The challenge, of course, is finding them. In Spain – as in many other EMEA countries – some industries are faring better than others, namely those which form part of current thriving sectors such as:  

  • Tech services: Whether based on developing services within the internet of things or software solutions as a service these small companies have considerably increased their strategical importance. Private equity firms investing in tech must not only place bets on the quality of the management team, but also on the target company’s ability to compete in a sector which can completely reshape on timelines as short as 2 years. Adding leverage to such a scenario and success – might – be assured.  


  • Real Estate Property Investment: In the current low-interest environment, many private equity fund and family offices have recycled their money back into real estate assets in pursuit of market-beating returns. The key element for any real estate property investor in Spain is to be able to reasonably predict cashflows, to measure CAPex and to gain control of the portfolio pursuant to a proper asset management strategy. Putting these all together, added to a vast post-crisis real estate portfolio offering, leads to a new era of investing in the real estate market in Spain, with reasonable leverage and minimum risk.


  • Tech + Real Estate (PropTech): Put the above sectors together an you will get Property technology. These newcomers have rapidly emerged as a near-flawless option for investors. Nobody can ignore that their creators are currently transforming the multi-billionaire industry based on how we buy, sell and rent property, mainly by offering genuine efficiencies, flexibility, security and protection around real estate transactions.  


At Fitzwilliam we have a strong reputation in providing top tier advice to lower mid-market direct lenders and private equity investors, acting as their local lawyers. We understand the target sectors and the lenders´ needs and concerns, being essential for them in many cases to entrust local advisors so as to ensure and secure their position while gaining and developing a close relationship with the management team.  

2017-12-30T16:22:57+00:00 26 October, 2017|

Spanish Dormant Companies: Director be Aware

Perhaps as a consequence of the financial crisis, or due to any other reasons, the truth is that more and more clients come to us regarding their Spanish dormant companies. Most of them, who had set up the Spanish company a decade ago, had almost forgotten about its existence. However, on any given day they receive a formal requirement from the Spanish Tax Authorities (“Hacienda”) threating them to become personally joint and severally liable for the company´s debt (i.e. the company have been subject to a Tax Audit) or alternatively they realise that the Companies Registry has been closed. 

The above scenario is increasingly more common and the outcome almost inevitable. 


Tax Audit 

Dormant companies have most frequently cease fulfilling their tax obligations in Spain. If discovered by a Tax Audit from Hacienda the company would become liable for paying the debt itself along with sanctions and delay interests. 

Further and most importantly, pursuant to Spanish legislation those who were directors as for the time of the company committing the tax offence, or even shareholders, might potentially become personally liable for payment of the Company tax debts. 

At Fitzwilliam Solicitors we have broad experience in defending clients in such proceedings, although it must be highlighted that the Spanish Tax Authorities are increasingly more reluctant to accept the director’s allegations and proper legal advice is required. 


Filing Annual Accounts 

The Spanish Companies Act requires Spanish companies to file annual accounts at the Companies Registry. It is not always appreciated that this requirement extends to companies which have been completely dormant from incorporation or have become dormant at some point. 

Late filing implies the closure of the Companies Registry page (preventing almost any event to be filed for that Company) and the imposition of penalties which now amount up to EUR 60,000.  Such penalties are becoming more frequent in the recent months. This is a particularly unwelcome cost for a company with no income and no bank account. 


Due Diligence Report 

In light of the above, it becomes critical for a dormant company shareholder or director to deal with any contingency whether regarding taxation or accountings. At Fitzwilliam Solicitors we stronglyadvise our clients to do so by instructing the performance of a complete Due Diligence. 

The term due diligence (DD) refers to a complete research and deep analysis of a company itself from different points of view. Outcomes of a DD are set out in Due Diligence Report which shows the existence of any contingency in the Company´s obligations and allowing the client to decide what needs to be done to regularise the situation of the same. In essence, a Due Diligence is aimed to reduce uncertainty in all aspects of the company or specifically in those related to a specific field, such as taxation. 

In particular, a most typical Due Diligence Report focusing on taxation and accountings will: 

  • Provide complete information about any taxation or accounting wrongdoing committed by the Company in the relevant period; 
  • Allow making any missing accountings from scratch so that they show the true picture of the company and is compliant with Spanish legislation requirements; 
  • Allow the re-file of annual accounts in the Companies Registry so as to re-open access to the same and hide the imposition of any penalties whatsoever; 
  • Evidence any tax wrongs committed by the Company, so that they can be regularised before the Spanish Tax Authorities issuing a Tax Audit. Benefits from voluntarily regularising tax wrongdoings before being requested to do so by Hacienda are numerous and extremely beneficial for taxpayers. This will be treated in further depth in a separate post; and 
  • Provide enough information so as to eventually dissolve and liquidate the company. 


The above is a brief example of how complex situations can be efficiently planned by taking proper advice. Of course, each case is unique and requires its own specific approach. At Fitzwilliam Solicitors we are proud to offer our clients tailored solutions to the specific matters they may face, whether they imply applying Spanish or English legislation. 


Contact us at Fitzwilliam Solicitors and our dedicated team in Spain will be pleased toanalyse your case in order to design the best strategy to protect your interests. 

2017-12-30T16:10:27+00:00 4 October, 2017|

Holding property in the UK through a foreign company: a structure doomed to disappear?


As for today, individuals who are resident but non-UK domiciled  

[1] (“Non-Dom”) are liable to inheritance tax on their UK assets but not on their non-UK assets. Non-Doms have benefited from such a generous advantage by setting up structures in which to hold an UK residential property indirectly through using an offshore company or trust. 

The above is broadly known as enveloping real estate property and the structure may be as simple as follows: 

Subject “A” was born in Madrid and he is living in London for five years (as a Non-Dom). Two years earlier, he set up a company in Spain, which bought a residential property located in London. Since “A” owns the shares of an offshore company, instead of owning the property itself, he is entitled to avoid IHT liability on death or lifetime gifts as regards the property. 

The Hunting of the Envelope 

The UK government has recently announced an aggressive switch consisting – among other measures – in clearing away most of the tax advantages enjoyed by the Non-Doms using an enveloped structure. These have included a) theintroduction of the Annual Tax on Enveloped Dwelling (ATED); b) the extension of Capital Gains Tax to non-UK residents making disposals of UK residential property; and c) a flat rate (15%) of Stamp Duty Land Tax (SDLT) for corporate purchasers. 

However, the latest reform of all – which is announced to apply from April 2017 – will most probably become the linchpin for the abandonment of the enveloped structures. Namely, we refer to the inclusion of shares in an offshore structure (trust or closed company) owning, directly or indirectly, residential property in the UK as property subject to IHT. Thus, such structures will become no longer valid as such shares no longer be considered as “excluded property” for IHT purposes. 

Taking into account the above example, from April 2017 Subject A estate upon death will include – for IHT purposes – the shares in the Spanish company and consequently the UK residential property. 

Massive De-Envelope 

Upfront, it might seem a good idea to undo the whole corporate structure as this does not reflect any apparent advantage. However, before taking the decision to de-envelope, some questions need to be answered Subject to a case-by-case analysis, some of the questions which should be answered before taking such a decision are the following: 

  • Type of structure: 
  • What structure do you actually have?; 
  • Why did you create this structure?; and 
  • What is the tax regime of the structure? 
  • Assets / Properties: 
  • What are the assets owned by this structure?; 
  • Where are based these assets?; and 
  • What is the market value of these assets? 
  • Alternatives: 
  • What would be the ideal structure considering the new tax changes introduced by the UK government?; 
  • What is the cost of de-enveloping the current structure?; and 
  • What is the cost of continuing as it is now? 

At Fitzwilliam, our dedicated team can assist you in the restructuring or reorganisation of your envelope scheme. Even better, we can advise you in the whole process from Spain, not needing to spend time and money travelling to the UK. Contact us today so that you can obtain a further knowledge of your case and of the different alternatives available to mitigate the effects of the recent tax changes. 

[1] Under English law domicile is the place where the individual has its permanent home, although he does not live there at the moment. 

2017-12-30T16:22:42+00:00 21 September, 2017|