How to Save €30K Annually in Taxes by Investing in Europe: Complete Guide for LATAM & U.S. Investors

Cristina Schuttmann
Aug 11
3 min read

If you’re from Mexico, Colombia, Argentina, or the U.S. and investing in Europe without tax optimization, you’re giving away thousands of euros each year to the tax authorities.Here’s how our clients legally save €15K–€50K annually.

THE REALITY NO ONE TELLS YOU

Real case without optimization (Mexican investor, €800K in Spain):

Spanish non-resident tax: 24% on rental income = €9,600
Mexican tax: 30% on global income = €12,000
Partial double taxation: €4,800 extraTotal annual taxes: €26,400

Same case WITH tax optimization:

Optimized corporate structure: €5,200
Use of bilateral treaty: €0 double taxation
Maximized deductions: €3,800 recoveredTotal annual taxes: €1,400💰 Annual savings: €25,000 (95% less)

THE 7 PILLARS OF INTERNATIONAL TAX OPTIMIZATION

PILLAR 1: USE OF BILATERAL TREATIES

Spain has treaties with 104 countries to avoid double taxation:

For Mexico:

Rental income: Taxed only in Spain
Capital gains: Partial exemption under conditions
Dividends: Max 5% withholding
Inheritance: Specific applicable protocol

For Colombia:

Imputation method: Full credit
Professional income: Taxed in country of residence
Interest: Max 10% withholding
Royalties: 5% Spanish withholding

For Argentina:

Rental income: 13% vs 24% standard
Dividends: 10% vs 19% general
Capital gains (securities): Exempt after 5 years
Pensions: Taxed in country of origin

For U.S.:

Dividends: 15% vs 19%
Interest: Full exemption under conditions
Royalties: 5% vs 24%
Capital gains: Foreign tax credit method

PILLAR 2: CHOOSING THE RIGHT LEGAL STRUCTURE

COMMON MISTAKE: Buying as an individual

Non-resident tax: Fixed 24%
No operational deductions
Complex inheritance planning
Limited liquidity

OPTIMIZED STRUCTURE: Spanish company (SL)

Corporate tax: 25% (23% for SMEs)
Depreciation deduction: 3% annually
100% deductible financing costs
Dividend planning: 5–15% depending on country

Example – Colombian investor €600K:

As individual: €7,200 annual tax
As SL: €2,100 annual tax
Savings: €5,100/year (71% less)

PILLAR 3: GEOGRAPHIC OPTIMIZATION – COUNTRY CHOICE

Spain – Ideal for:

Investors seeking residency
Portfolios €300K–€2M
Mexico/Colombia treaty benefits
Golden Visa from €500K

Spain tax benefits:

Depreciation: 3% annually
100% deductible expenses
Capital gains reinvestment: Tax deferral
SOCIMI regime: Tax transparency

Portugal – Best for:

LATAM investors seeking NHR status
Portfolios €500K+
Family tax optimization
Golden Visa hospitality investment from €500K

Portugal NHR benefits:

20% flat tax for 10 years
Foreign income: Full exemption
Capital gains: Exemption after 3 years
Inheritance: No tax for spouse/children

France – Suitable for:

Sophisticated investors (€1M+)
International holding structures
Treaty network leverage
Strategic tax residency

PILLAR 4: TAX TIMING – WHY IT MATTERS

Purchase timing:

Q4: Full-year deductions
Pre-sales: Deductible VAT before delivery
Financing: Deduct interest from signing

Sale timing:

+3 years: Capital gains exemption (Portugal)
Reinvestment: Tax deferral (Spain)
Structuring: Dividend vs. capital gain treatment

PILLAR 5: MAXIMIZED DEDUCTIONS

Spain deductible expenses:

100% mortgage interest
3% property depreciation
Property tax & fees: 100%
Insurance: 100%
Repairs: 100%
Admin: 100%
Utilities (if vacant): 100%
Tax advisory: 100%

Portugal (NHR) deductions:

Maintenance: 15% of gross rent
Depreciation: Linear method
Interest: No limit
Insurance: 100%

Example – Lisbon villa €750K:

Gross rent: €45,000
Deductions: €18,500
Taxable base: €26,500
NHR tax (20%): €5,300
Effective rate: 11.7% vs 28% standard

PILLAR 6: INTERNATIONAL COMPLIANCE

Mexican requirements:

SHCP notice: Foreign accounts > MX$300K
Annual declaration: Global income
Foreign tax credit: For Spanish taxes
Deferred tax on unrealized capital gains

Colombian requirements:

DIAN reporting: Foreign assets > 4,500 UVT
Global income tax return
Tax credit: Spanish taxes paid
Currency control: Investments > $10K USD

U.S. requirements:

FBAR: Accounts > $10K USD
Form 8938 (FATCA): Assets > $50K
Schedule B: Foreign interest
Form 3520: Trust structures

PILLAR 7: INTEGRATED ESTATE PLANNING

Temporary usufruct: Inheritance tax optimization
Staggered gifts: Annual exemptions
Life insurance: Inheritance liquidity
Trust structures: Favorable jurisdictions

COMMON MISTAKES THAT COST THOUSANDS

Not checking applicable treaty → €5K–€15K/year in double taxation
Wrong legal structure → €8K–€25K/year in overtaxation
Poor transaction timing → €3K–€12K lost in deductions
Missing available deductions → €4K–€18K/year not optimized
Non-compliance in home country → Fines €2K–€50K + interest

REAL OPTIMIZATION CASES

Mexican entrepreneur €1.2M in MadridBefore: €45K/year taxes → After: €12K/year → Savings: €33K/year (73%)
Colombian family €800K in LisbonBefore: €38K/year (Colombia + Portugal) → After: €6K/year (NHR only) → Savings: €32K/year (84%)
U.S. investor $2M in ParisBefore: $89K/year → After: $31K/year → Savings: $58K/year (65%)