Structuring Ownership: How Irish Investors Can Minimise Exposure to Future Foreign Property Surcharges

Introduction

Irish expats and investors are increasingly looking beyond the island for holiday homes, retirement retreats, and rental income. While overseas markets such as Spain, Portugal and Greece remain attractive, governments are tightening tax rules. 2025 has already seen Spain propose a 100 % surcharge on resale purchases by non‑EU buyers and Portugal raise its Municipal Property Transfer Tax (IMT) for non‑resident purchasers.

These moves signal a broader trend: countries are seeking to curb speculative foreign buying and protect housing affordability. For Irish investors, the key question is how to structure ownership so that future surcharges have minimal impact.

This guide explains the emerging landscape, outlines the most common ownership structures, and provides a practical checklist for protecting your overseas property investments.

1. Understanding the Emerging Surcharge Landscape

Country	Surcharge / Change (2025)	Who Is Affected	Typical Rate Impact
Spain	Proposed 100 % surcharge on the Transfer Tax (ITP) for non‑EU, non‑resident buyers of resale homes. New‑builds (subject to VAT) are exempt.	Non‑EU nationals buying second‑hand properties; some structures such as usufruct may also be caught.	Normal ITP (≈10 % in many regions) could double to ≈20 % of the purchase price.
Portugal	IMT increase for non‑resident buyers of second homes; exact brackets pending but expected to add 2‑4 % on top of the existing scale.	Non‑resident individuals (including Irish citizens living abroad) buying holiday homes; Portuguese emigrants are exempt.	A €300,000 purchase could see IMT rise from €15,000 to ≈€21,000‑€27,000.
Greece	Introduced a “foreign buyer levy” of 1 % on property values above €150,000 for non‑EU purchasers (effective 2024, extended to 2026).	Non‑EU buyers of any residential property.	Adds €1,500 on a €150,000 home; €5,000 on a €500,000 home.
France	No surcharge, but higher notary fees for foreign buyers and a 10 % tax on luxury second homes (already in place).	High‑value foreign purchasers.	Increases total acquisition cost by €30,000‑€50,000 on €500,000‑€1 m properties.

Sources: Spanish tax blog (2025 surcharge proposal), Idealista Portugal article (2025 IMT increase), Greek government press release (2024 levy), French notary data (2023‑2024).

Why the Trend Matters

Revenue Generation – Governments view foreign property as a lucrative source of tax revenue.
Housing Affordability – Restricting speculative buying is seen as a way to stabilise local markets.
Policy Volatility – Once a surcharge is introduced, it can be adjusted annually, creating uncertainty for long‑term investors.

The logical response is to future‑proof ownership structures now, rather than reacting after a surcharge is enacted.

2. Core Ownership Structures and Their Tax Implications

2.1 Direct Personal Ownership

How it works: The Irish buyer registers as the legal owner on the title deed.
Pros: Simple, low set‑up cost, transparent for mortgage lenders.
Cons: Direct exposure to any surcharge; no separation of personal assets from property‑related tax liabilities.
Best for: Low‑value holiday homes where the surcharge impact is modest, or when the buyer holds EU residency that exempts them (e.g., Spanish EU‑resident status).

2.2 Holding Company (Domestic or Offshore)

Variant	Key Features	Surcharge Exposure	Irish Tax Considerations
Irish Ltd	Incorporated in Ireland; shares can be held by individuals or trusts.	May be treated as a non‑resident entity by the foreign jurisdiction, potentially avoiding the buyer surcharge (e.g., Spain’s non‑EU definition focuses on natural persons).	Subject to Irish corporation tax (12.5 % on trading profits). Dividends to Irish shareholders attract Irish dividend tax (up to 20 %).
Offshore Ltd (e.g., Malta, Cyprus)	Low‑tax jurisdiction, EU‑member, strong treaty network.	Often classified as an EU entity, thereby exempt from non‑EU surcharges.	Must consider Controlled Foreign Company (CFC) rules in Ireland; may trigger Irish CT on undistributed profits.
Special Purpose Vehicle (SPV) in the target country	Local company created solely for the property.	Treated as a resident entity; surcharges usually not applicable because the buyer is a company, not an individual.	Local corporate tax (e.g., Spain 25 %); Irish shareholders taxed on dividends and potential exit gains.

Practical tip: For Spain, an EU‑registered company (e.g., Irish Ltd) can sidestep the 100 % surcharge because the law targets “non‑EU natural persons”. However, the company will still pay the standard ITP (≈10 %).

2.3 Partnerships & Co‑ownership Agreements

Joint Tenancy / Tenancy in Common – Allows multiple owners to split the purchase price and tax liability.
Surcharge impact: Each co‑owner is assessed individually. If any co‑owner is a non‑EU resident, the surcharge may apply to their share only.
Strategic use: Pair a non‑EU buyer with an EU‑resident partner (spouse, child) to reduce the surcharge portion. Ensure the partnership agreement clearly allocates income and expenses.

2.4 Trusts and Foundations

Type	Jurisdiction	Effect on Surcharge	Irish Tax Treatment
Irish Discretionary Trust	Ireland	Beneficiaries are the “ultimate owners”. The trust itself is a non‑resident entity for foreign tax purposes, potentially avoiding buyer surcharges.	Trust income taxed in Ireland (19 % on undistributed income). Distributions taxed at beneficiary level.
Cyprus International Trust	Cyprus (EU)	Recognised as an EU entity, often exempt from non‑EU buyer surcharges.	Must report to Irish Revenue under the “Foreign Trust” rules; may attract CGT on disposals.
Foundations (e.g., Liechtenstein)	Liechtenstein	Treated as a legal person, not a natural person – generally bypasses buyer surcharges.	Subject to Irish “controlled foreign corporation” (CFC) rules; careful planning required.

Key consideration: Trusts add complexity and ongoing administration costs but can be powerful for estate planning and tax deferral.

2.5 Residency‑Based Strategies

Obtain EU residency (e.g., Spanish Golden Visa, Portuguese D7 Visa) before purchase. Many surcharge regimes hinge on non‑resident status; becoming a resident re‑classifies you as an EU buyer, instantly removing the surcharge risk.
Temporary tax residency – Some countries (Spain, Portugal) allow a 30‑day “non‑habitual resident” status that can be leveraged for a single transaction.

3. Practical Steps to Shield Your Investment

Map Your Tax Residency
- Verify your Irish tax residency (183‑day rule) and any foreign residency status.
- If you plan a purchase within the next 12‑18 months, consider applying for EU residency before the transaction.
Choose the Right Legal Vehicle
- For high‑value assets (≥€500,000) where a surcharge could add €50,000‑€100,000, an EU‑registered company or trust is often worthwhile.
- For mid‑range holiday homes (€150‑€300k), a co‑ownership agreement with an EU‑resident partner may be simpler.
Model the Tax Scenarios
- Use a spreadsheet to compare:
  - Direct purchase (personal) – surcharge + ITP/IMT + notary fees.
  - Company purchase – corporate tax + dividend tax vs. surcharge.
  - Trust purchase – trust tax + CGT on exit vs. surcharge.
- Include ongoing costs: annual filing, accounting, and potential double‑tax treaty relief.
Check Local Treaty Benefits
- Ireland has double‑taxation agreements with Spain, Portugal, Greece, and most EU states. These can reduce withholding tax on rental income and CGT on disposal.
- Ensure the chosen structure is “resident” in a treaty‑partner country to benefit.
Engage Local Legal Counsel
- Local lawyers can confirm whether a proposed structure is recognised for tax purposes and can advise on registration, notary, and land registry requirements.
Plan for Future Surcharge Changes
- Include a “surcharge clause” in partnership agreements that allows a future sale or restructuring if a new levy is introduced.
- Keep an eye on parliamentary debates; many surcharges are proposal‑stage (e.g., Spain’s 100 % surcharge) and may be altered.

4. Checklist for Irish Buyers (2025‑2026)

✅ Item	Why It Matters
Confirm Irish tax residency (183‑day rule).	Determines Irish CGT liability on foreign disposals.
Identify target country’s surcharge status (Spain, Portugal, Greece).	Avoids surprise acquisition costs.
Decide on ownership vehicle (personal, company, trust, partnership).	Directly influences surcharge exposure.
Run tax‑impact model (including IMT/ITP, corporate tax, dividend tax).	Quantifies cost‑benefit of each structure.
Check EU residency eligibility (Golden Visa, D7, etc.).	May instantly remove surcharge risk.
Review double‑tax treaty provisions with Ireland.	Prevents double taxation on rental income/CGT.
Engage local solicitor for title and registration.	Ensures compliance with local property law.
Set up ongoing compliance (annual filing, accounting).	Avoids penalties and keeps structure valid.
Monitor legislative updates (e.g., Spanish parliament, Portuguese budget).	Allows timely restructuring if needed.
Document ownership intentions (estate planning, succession).	Facilitates smooth transfer to heirs.

5. Case Studies

5.1 Dublin‑Based Investor Buying a €800,000 Villa in Marbella

Structure	Total Acquisition Cost (incl. surcharge)	Ongoing Tax (annual)	Exit CGT (estimated)
Direct personal (non‑EU)	€800,000 + 10 % ITP (€80k) + 100 % surcharge (€80k) = €960k	Irish CGT on rental profit (33 %) + Spanish non‑resident tax (19 %)	33 % on gain (subject to double‑tax relief).
Irish Ltd (shareholder)	€800,000 + 10 % ITP (€80k) = €880k	Irish CT 12.5 % on profit (if trading) + Spanish tax on rental (19 %).	Dividends taxed at 20 % in Ireland + CGT on disposal of shares (19 %).
Cyprus International Trust	€800,000 + 10 % ITP (€80k) = €880k	Trust tax (19 %) on rental; beneficiaries taxed on distributions.	CGT on trust asset disposal (19 %) + Irish beneficiary tax (19 %).

Result: Using an Irish Ltd saves €80,000 (the surcharge) but adds corporate compliance. For a high‑value asset, the saving outweighs the extra admin.

5.2 Cork‑Based Retiree Purchasing a €250,000 Algarve Apartment

Structure	Impact
Direct personal (non‑resident)	IMT increase could add €5,000‑€8,000 on top of standard rates.
Portuguese Ltd (resident)	No surcharge; pays standard IMT (≈€5,000) plus corporate tax on rental profit (23 %).
Co‑ownership with EU‑resident spouse	Only spouse’s share (50 %) escapes surcharge; buyer pays surcharge on remaining €125,000 → extra €2,500‑€4,000.

Result: Forming a Portuguese Ltd is the cleanest way to avoid the IMT hike for a modest‑priced property.

6. Looking Ahead – What Might Change in 2026‑2028?

EU‑wide “Foreign Buyer Tax Directive” – Drafted in 2024, could harmonise surcharges across member states, potentially standardising a 5‑10 % levy on all non‑resident purchases.
Digital Nomad Visas – Many countries (e.g., Spain’s “Digital Nomad Visa”) will grant tax residency after 12‑month stays, which could automatically remove surcharge exposure for long‑term renters.
Treaty Updates – Ireland is renegotiating its treaty with Spain to include a “surcharge exemption clause” for Irish residents; watch for the 2027 implementation.

Staying proactive—by choosing flexible structures and keeping an eye on policy shifts—will keep your overseas portfolio resilient.

Conclusion

Foreign property surcharges are no longer a fringe risk; they are becoming a mainstream tool for governments to manage housing markets. For Irish investors, the best defence is strategic ownership structuring:

Use EU‑registered companies or trusts to sidestep non‑EU buyer definitions.
Leverage residency programmes to re‑classify yourself as an EU buyer before purchase.
Model every scenario to ensure the tax savings outweigh the extra administrative burden.
Maintain a compliance‑first mindset—regularly review legislation, keep proper records, and work with both Irish and local experts.

By following the checklist and case‑study insights above, you can protect your overseas investment from future surcharges while still enjoying the lifestyle and financial benefits of owning property abroad.

Disclaimer: This article provides general information and does not constitute tax or legal advice. Seek professional counsel tailored to your personal circumstances before making any investment decisions.