QA shelter part4a v1.01 070601 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 (a): Ongoing

QUILL ASSETS, Registered Address: Harbro House, Crown Lane, Denbigh LL16 3SY United Kingdom. Reg No. 2239135

The Willwriters Association

The Association of Lawyers

ÂŠ The Quill Group S.L. v1.01, 01F07

The Birth of Your Shelter | Part Four: 01

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: Ongoing

Your legal requirement for a ‘permanent’ office facilties – if maximum tax breaks and allowances are to be obtained in respect of any rental income This document is something that you might care to read – for general interest – even if its contents does not apply to you at the present time. It however DOES – specifically and urgently - apply to Quill Patrimonio Familiar shelter owner (or Quill Wills clients) - who obtains any form of rental income from properties they own in Spain.

DO YOU RECEIVE RENTS ?

An income into your shelter can be (1) benign – or (2) trading.

If you – already - or are intending to - generate If yours is a ‘hoarding’ shelter then there is no rental incomes – you’re your property in Spain income and its bank account is not used. - in these times when such incomes are being more seriously tracked by the UK, Eire, and 1. A benign income does not require you to fulfill any special requirements in order that Spain authorities for taxation purposes – then is not subject to tax. you are likely to want the fullest potential to A benign income is typically from an avoid – or offset all forms of expenditure – investment or pension schemes - or some against tax in this regard - including: contract or royalties - that does not involve The complete offset against tax of all running any trading activity in Spain. costs for the entire property – in respect of A benign therefore - means any form of rental income actively received income that simply ‘arrives’ into your shelter And – to avoid the need for declaration of without it trading or requiring anyone ‘to be these incomes to any other authority – (i.e. hard at work’ - in Spain - in order to achieve other than through your shelter accounts in that income. Spain – which are likely to be free of tax) A benign income – to your shelter of almost Property transfer tax - upon the purchase of any amount each year - is (almost certainly) properties that are intended to create some capable of being free of income tax, forever. form of rental income 2. A rental income is an income that is derived directly out of a property in Spain, involving A reminder about shelter ‘Benign’ work - of some sort - being done in Spain and ‘rental’ incomes (including preparing the property for visitors, obtaining clients etc). You might like to be reminded – for good order – of the difference between benign income (on one hand) – and rental - and other forms of trading income (on the other) into your shelter. © The Quill Group S.L. v1.01, 01F07

A rental income would normally therefore be a ‘trading’ income – and subject to tax – BUT – with care - can remain benign.

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The Birth of Your Shelter | Part Four: Ongoing

Rents received are a ‘trading income ‘ - but - are special - because they are capable of being completely nullified - by the offsetable expenses involved in maintaining the property.

In order that all your rental income can be properly and honestly declared BUT - THEN rendered free of tax - requires us to jump over a hurdle or two.

The purpose of this document is to make it This is the position we shall be seeking to possible to jump over the first (very low) hurdle achieve for you. – in order that we can make a claim for tax Declaring all rental income to avoid there exemption – on behalf of your shelter - that is ever being tax man problems – but removing likely to be of 100% of any form of tax - relating to any income or benefit you might receive from all or almost all tax. the use of your main property asset in Spain. 3. Other types of trading income generated in Spain - such as running a bar or working This might be in order that we can honestly from home as an architect - generate income declare - and then totally offset - any income - BUT - that income is not capable of being you might derive from renting out a room or offset by the entire costs of maintaining and apartment that is included in the escritura of improving etc, your property assets in Spain your property in Spain. - and thus must be taxed if only a little. It might be – for example – be (a) that you invite relatives to come to stay and put them up in an apartment or bedroom as paying guests – OR – (b) that you rent your entire villa through an 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 There is obviously scope - if you are running claim in respect of the cost of your property. some form of agency from your back bedroom to offset the costs as they relate to your This is because Spanish tax rules say that back bedroom against the income from that unless your sheltered family business owns a separate office address - giving you access to business activity. sufficient office facilities to run the business If - however - you are running a bar - two – then the property you own cannot possibly be kilometers away from your property - then both (1) permanently available for rent and also there are no possible offsets relating to the (2) a permanent base from which you can run bar against your property assets in Spain. your business. We hoped this puts the issue of income into You cannot have things both ways. your shelter into focus. Either the property is a place from which you can continuously run your business - whenever The purpose of this document If not please let us know and we will explain that requirement might arise - for meetings further. Now – to move to the purpose of this with the revenue or your accountant - OR - it is permanently available for rent. document.

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The Birth of Your Shelter | Part Four: Ongoing

If it not permanently available for rent then its total From the point of view of providing ‘the office costs cannot be offset against any rents received qualification’ – the value of the finca portfolio is not of great relevance because whilst this is an (even if those are only for a week or a month). If a claim is made to offset the entire costs of ‘investment’ into a landed property asset – the the property against rental income (even if purpose of the investment is not the property only for a week or a month) then it must be asset itself – but the qualification to offset taxes possible to demonstrate that there is a separate – that that ownership provides. office facility permanently available at all times The ownership ‘escritura’ includes additional whenever it is required. rights – giving access to other surrounding office facilities the owner to make use – on a daily rate basis - involving adjacent - shared The Tambor solution 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 be kept – along with the right to rent a desk or office space or meeting rooms etc - if and when they are required. The escritura involving a space that your shelter owns - becomes the legitimate permanent ‘office address’ of your shelter – separate from the In order to meet the needs of many clients of property address that is either occasionally – or differing types – Quill has made ‘the Tambor’ at all times – let – or sub let. arrangements. The Tambor is a local property portfolio - of Next step touristic rental and long term rental properties If the Tambor office suits your needs to provide mainly comprised of traditional Canarian your shelter with a ‘permanent’ office address fincas. 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, Espana. 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 – in the same way as for other payments you have made – to the UK or Spain.

This portfolio includes ‘serviced office’ If you pay via Quill then we shall advise you of facilities. your payment to Tambor Patrimonio Familiar The Tambor makes it possible for any shelter S.L. made on your behalf – and Tambor will to purchase its own ‘permanent’ office space provide a receipt. – – for £1,500 (€2000) - thus jumping the office qualification hurdle described above. © The Quill Group S.L. v1.01, 01F07

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Rules of the Tambor

of investment property purchase – sale renovation, compliance with government regulations and statutory obligations, and corporate governance.

1. The Tambor is a private property investment club only available to Quill Assets Patrimonio Familiar shelter or Bi-cell clients. Investment in the Tambor is not available to private 6. Owners have no rights to income from the individuals or members of the public in rental of the property portfolio but a total general. right to the growth in the value of the Tambor as reflected in their percentage ownership 1. Tambor is a private investment club. It is not of it in line with valuations of the Tambor an open offer to the general public. Entry is by portfolio. invitation only. 2. Its purpose is to enable – in a practical way – 6. The Tambor investment strategy is long term capital growth. However holdings in observance of certain legal requirements that Tambor can be increased at any time, or are a condition of some of the tax regimes redeemed at three months notice in whole or available to shelter owners. in part. In either eventuality the portfolio is 2. Ok as above. firstly revalued in accordance with generally accepted accounting practices. 3. All funds deposited into the Tambor arrangement are for the purchase of a specific 7. The managers of the Tambor shall provide equity holding. This ownership of an equity periodic reports and certificate of ownership stakeholding in the Tambor is on the basis of to equity owners upon the state of the assets, a percentage of the total portfolio at the time income derived and value of the portfolio. of the purchase by the owner. 7. The Tambor management team will provide 3. An investor is issued a proportionate holding periodic management reports to its members. in Tambor calculated by way of - the ratio Anybody additional information or enquiries of cash invested to the total value of the can be directed by way of email through property portfolio -. The property portfolio the members’ website financial section. The is firstly revalued at or close to the time an management team is available at all times investment is made. during normal working hours. 4. An escritura document is provided by the 8. Any owner can serve notice seeking to sell notary to each owner - identifying what is their participation ownership in part or full, owned and the general terms of ownership which will be purchased either by an increase within Spain’s laws of horizontal ownership. in their holding of another owner or by the Tambor itself or by a new Tambor owner. 4. NB – This matter concerning NOTARISED documents still seems to be unclear. 8. NB - Not needed. 5. The affairs of the Tambor are at all to be 11. Owners wishing to rent the use of areas of managed by a professional management the Tambor or office services or facilities at team. This includes the renting of areas La Vegueta shall be given priority and first of the property with touristic licenses to refusal. generate the income required by the Tambor to manage its affairs – and / to maintain all 8. A diary is maintained of those members periodically making use of Tambor’s offices property in perfect order and to improve and in Lanzarote at any given time. Any member add to the property portfolio. wishing to make use of the office facilities in 5. Tambor is managed by an experienced Lanzarote must first contact the management team of professionals. These duties team through the finance section of the principally include maintaining the books members’ website. and accounting records, administration © The Quill Group S.L. v1.01, 01F07

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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 (two thousand Euros). (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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