QA-TONTINE-shelter_part4-4_v1.02,10G07 by Simon Harris

Quill Assets | The Birth of a Tontine Shelter | Part 4 of 6

A Quill Group Company

The Birth of Your Shelter Part Four: Consolidation 4.4 Rental income permanent office facilities

QUILL ASSETS, The Quill Group Company Secretary LLP Harbro House, Crown Lane, Denbigh LL16 3SY United Kingdom. The Willwriters Association Reg No. OC315295

The Association of Lawyers

ÂŠ The Quill Group S.L. v1.02, 10G07

The Birth of Your Shelter | Part Four: Consolidation

This is one of several sub sections that form Part 4 of the ‘Birth of your Shelter’ documentation. Together – each of the sub sections of Part 4 – cover the subject of the consolidation of your Patrimonio Familiar shelter, which involves a series of events that can only begin to occur after your shelter bank account has been unfrozen. Our practice is to divide the entire subject of consolidation into small ‘bites’ – which we ask you to read – and respond upon. The contents of this booklet is one of those ‘bites’.

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The Birth of Your Shelter | Part Four: Consolidation

The legal requirement for ‘permanent’ office facilities – maximum tax breaks and allowances are to be obtained you receive in respect of ANY rental income This document is something that you might care to read – for general interest – even if its contents do not apply to you at the present time. It however DOES – specifically and urgently - apply to Quill Patrimonio Familiar shelter owners (or Quill Wills clients) - who obtain any form of rental income from properties they own in Spain. You might like to be reminded – for good order – of the difference between benign income and DO YOU RECEIVE RENTS ? rental - and other forms of trading income into If you – already - or are intending to - generate your shelter. rental incomes – from your property in Spain 1. A benign income does not require you to fulfil - in these times when such incomes are being any special requirements in order to be free of more seriously tracked by the UK, Eire, and tax. Spain authorities for taxation purposes – then A benign income is typically from an you are likely to want the fullest potential to investment or pension scheme - or some avoid – or offset all forms of expenditure against contract or royalties - that does not involve tax any in this regard - including: any trading activity in Spain. The complete offset of all running costs for the entire property against tax in respect of rental income actively received To avoid the need for declaration of these incomes to any other authority including your homeland tax office, other than through your shelter accounts in Spain – which have the potential to be free of tax Property transfer tax - on the purchase of new properties - that are intended to create some form of rental income

A reminder about shelter ‘Benign’ and ‘rental’ incomes Income into your shelter can be (1) benign – or (2) trading or (3) hoarding. If yours is a ‘hoarding’ shelter then there is no income - and its bank account is not used and so non of this applies to you. © The Quill Group S.L. v1.02, 10G07

‘Benign’ therefore - means any form of income that simply ‘arrives’ into your shelter without it trading or requiring anyone ‘to be hard at work’ - in Spain - in order to achieve it. A benign income – to your shelter of almost any amount each year - is (almost certainly) capable of being free of income tax, forever. 2. A rental income is an income that is derived directly out of a property in Spain, involving work - of some sort - being done in Spain (including preparing the property for visitors, obtaining clients etc). A rental income would normally therefore be a ‘trading’ income – and subject to tax – BUT – with care - can remain benign - or at least offset by all of your running costs in Spain. Rents received are a ‘trading income’ - but - are special - because they are capable of

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The Birth of Your Shelter | Part Four: Consolidation

being completely nullified - by the offsetable The purpose of this document is to make it expenses involved in maintaining the whole possible to jump over the first (very low) hurdle property - along with surrounding costs. – in order that we can make a claim for tax This is the position we shall be seeking to exemption – on behalf of your shelter - that is achieve for you when we complete your likely to be 100% of any form of tax - relating to any income or benefit you might receive from accounts in Spain each July. the use of your main property asset in Spain. (1) Declaring all rental income - to avoid there ever being tax man problems (2) minimising This might be in order that we can honestly declare - and then totally offset - any income the tax. you might derive from renting out a room or 3. Other types of trading income generated in apartment that is included in the escritura of Spain - such as running a bar or working your property in Spain. from home as an architect - generate income - BUT - that income is not capable of being It might be – for example – be (a) that you invite offset by the entire costs of maintaining and relatives to come to stay and put them up in an improving etc, your property assets in Spain apartment or bedroom as ‘paying guests’ – OR – (b) that you rent your entire villa through an - and thus must be taxed (if only a little). agent for all or part of the year – OR – (c) that you visit your villa as often as you can and rent it to friends or family whenever you are not using it.

The law in this regard Under normal circumstances you will have difficulty in making anything other than a part claim in respect of the cost of your property. This is because Spanish tax rules say that unless your sheltered family business owns a separate office address - giving you access to sufficient office facilities to run the business – then the property you own cannot possibly be both (1) permanently available for rent and also If - however - you are running a bar - two (2) a permanent base from which you can run kilometres away from your property - then your business. there are no possible offsets relating to the You cannot have things both ways. bar against your property assets in Spain. Either the property is a place from which you We hoped this puts the issue of income into your can continuously run your business - whenever shelter into focus. that requirement might arise - for meetings If not please let us know and we will explain with the revenue or your accountant - OR - it is further. Now – to move to the purpose of this permanently available for rent. document. If it is not permanently available for rent then its total costs cannot be offset against any rents A hurdle to be jumped In order that all your rental income can be received (even if those are only for a week or a properly and honestly declared BUT - THEN month). There is obviously scope - if you are running some form of agency from your back bedroom to offset some costs - as they relate to your back bedroom - against the income from that business activity.

rendered free of tax - requires us to jump over a If a claim is made to offset the entire costs of hurdle or two. the property against rental income (even if only © The Quill Group S.L. v1.02, 10G07

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The Birth of Your Shelter | Part Four: Consolidation

for a week or a month) then it must be possible to demonstrate that there is a separate office facility permanently available to you at all times - for your exclusive use whenever it is required.

The Tambor solution

The main purpose of the Tambor - however - is as an investment vehicle for shelter owners with cash on deposit wanting greater tax free returns then are normally available.

Office facilities The Tambor office ownership ‘escritura’ includes additional rights – giving access to other surrounding office facilities for the owner to make use of – on a daily rate basis - involving adjacent - shared office facilities and space – just like any serviced office in Dublin, London or Madrid.

In this way your shelter owns a permanent lifetime storage space - where (if only theoretically) its documents, papers and necessary items can In order to meet the needs of many clients of be kept – along with the right to rent a desk or differing types – Quill has made ‘the Tambor’ office space or meeting rooms etc - if and when they are required. arrangements. The Tambor is a local property portfolio - of touristic rental and long term rental properties mainly comprised of traditional Canarian fincas. This portfolio of properties includes ‘serviced office’ facility spaces. The Tambor makes it possible for any shelter to purchase its own ‘permanent’ office space – – for £1,500 (€2000) - thus jumping the office qualification hurdle described above.

The escritura involving a space that your shelter owns - becomes the legitimate permanent ‘office address’ of your shelter – separate from the property address that is either occasionally – or at all times – let – or sub let.

Next step If the Tambor office suits your needs to provide your shelter with a ‘permanent’ office address through the Tambor – please visit www.tamborproperties.com – and complete the online form there – OR – complete the form below - and post it to Tambor Patrimonio Familiar, La Vegueta, Lanzarote, Las Palmas, España. You can send payment of €2,000 – or £1400 – by euro cheque – drawn on a Spanish bank - directly to Tambor Patrimonio Familiar S.L. – or - if it is more convenient for you – transfer those funds through Quill to our UK or Spain office accounts. in the same way as for other payments you have made.

From the point of view of providing ‘the office qualification’ – the value of the finca portfolio is not of great relevance - because whilst this is an ‘investment’ into a landed property asset – the purpose of the investment is not the property asset itself – but the qualification to offset taxes – that ownership provides. © The Quill Group S.L. v1.02, 10G07

If you pay via Quill then we shall advise you of the payment we make to Tambor Patrimonio Familiar S.L. on your behalf – and Tambor will provide a receipt.

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Rules of the Tambor 1. The Tambor is a private property investment club only available to Quill Assets Patrimonio Familiar shelter or Bi-cell clients. Tambor is a private investment club. It is not an open offer to the general public. Entry is by invitation only.

The Tambor investment strategy is long term capital growth. However holdings in Tambor can be increased at any time, or redeemed at three months notice in whole or in part. In either eventuality the portfolio is firstly revalued in accordance with generally accepted accounting practices.

2. Its purpose is to enable – in a practical way – observance of certain legal requirements that are a condition of some of the tax regimes 7. The Tambor management team will provide available to shelter owners. periodic management reports to its members. Anybody additional information or enquiries 3. All funds deposited into the Tambor can be directed by way of email through the arrangement are for the purchase of a specific members’ website financial section. equity holding. The management team is available at all This ownership of an equity stakeholding in times during normal working hours. the Tambor is on the basis of a percentage of the total portfolio at the time of the purchase 8. Owners wishing to rent the use of areas of by the owner. the Tambor or office services or facilities at La Vegueta shall be given priority - and ‘first An investor is issued a proportionate holding refusal’. in Tambor calculated by way of - the ratio of cash invested to the total value of the property Member wishing to make use of the office portfolio. facilities in Lanzarote must first contact The property portfolio is firstly revalued at or close to the time an investment is made.

the management team through the finance section of the members’ website.

4. A ‘sub escritura’ document is provided to each owner - identifying what is owned and the general terms of ownership within Spain’s laws of horizontal ownership. 5. Tambor is managed by an experienced team of professionals. These duties principally include maintaining the books and accounting records, administration of investment property purchase – sale renovation, compliance with government regulations and statutory obligations, and corporate governance. 6. Owners have no rights to income from the rental of the property portfolio but a total right to the growth in the value of the Tambor as reflected in their percentage ownership of it in line with valuations of the Tambor portfolio.

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ÂŠ The Quill Group S.L. v1.02, 10G07

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Form no – toe001

Tambor Patrimonio Familiar S.L.

Application for a Tambor Office Escritura (This form is for existing registered shelter companies only) 1. Name of your shelter company :- .............................................................................................................................................. 2. Shelter company registration number ...................................................................................................................................... 3. What is your relationship with the shelter company? (e.g. Sole beneficial owner, joint beneficial owner, appointed manager, majority/minority share holder) .................................................................................................................................................................................................... 4. Does your shelter company own real estate property in Spain or Canary Islands? 5. If answer to 2. above is “yes”, insert address of real estate property :-

yes

(If answer is “no”, go to question 4.)

.................................................................................................................................................................................................... .................................................................................................................................................................................................... 6. Do you agree to transfer the registered office of your shelter company to the Tambor office in La Vegueta, Tinajo, Lanzarote? yes no (Transfer of registered office must be undertaken to fulfil the requirements of the Spanish Tax authorities, in order to receive the relevant tax allowances.) 7. Upon approval of my application herein by the Tambor management team, I agree to pay the fee of €2,000 | £1,400 (two thousand Euros | one thousand four hundred pounds Sterling). A member of the Tambor team will contact you as soon as possible to conclude your method of payment. (Your name) ............................................................................................................................................................................... (Your address for documentation) ............................................................................................................................................ .................................................................................................................................................................................................... (Telephone number) ..................................................................................................................................................................

I understand – that upon receipt of this signed and completed form, the management team of Tambor Patrimonio Familiar S.L. will conduct an immediate review of the information and subject to approval, the necessary procedure for transfer of your shelter’s registered office will commence. I hereby verify - that at the time of completion, the information I have supplied in this form is true and correct to the best of my knowledge. I also relinquish Tambor Patrimonio Familiar S.L. and all its management team of any liability in connection with this form if it is henceforth found that any part of the information supplied by me is incorrect. I confirm that Tambor Patrimonio Familiar S.L. and all its management team are not responsible for any delays in processing which have been caused by third parties including Registrars and Notaries.

Signature ..................................................................................................................... Date ................... / ................. /20...............

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