Capital gain in the UK, Capital loss in Spain?

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    Capital gain in the UK, Capital loss in Spain?

    An interesting one I hope:

    I have UK property in a UK company, ABC Ltd. As the properties have been owned for a long time, each has a substantial Capital Gain associated with it.

    A few years ago I formed a Spanish company ABC SL, a 100% subsidiary of ABC Ltd. It borrowed money from ABC Ltd to buy Spanish property (not my wisest ever purchase!)

    The Spanish properties are down about 1/3 in value.

    Ideally I would like to transfer the Spanish properties into the UK company at their original cost, so that selling them would realize a Capital Loss which would offset a Capital Gain if I also sold some UK property.

    However, I have been advised I cannot do this and am only allowed to do the transfer at current values. If I do this (or, equivalently, sell the Spanish properties while they are still owned by the Spanish company) the Spanish company will make a loss and it will be unable to repay the loan to the UK Company. However, I am told that in that case the UK Company would not be able to write off some of the loan as a loss.

    So I seem to be absolutely stuck with a loss in Spain that I cannot offset against a UK gain - even though they are effectively owned by the same company. Does anyone have any bright ideas, please?

    You should consult a tax accountant as it is unlikely this forum has members with such expert knowledge .

    Have you considered incorporating a new company ABC2 Ltd to buy the shares of ABC SL from ABC Ltd at price equal to current market value of property asset value held by ABC SL and offer delayed payment. terms?


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