FAQ

GBH Smart Investment is a construction and investment company. We invest in commercial real estate, as well as provide individual and fractional investment opportunities to potential investors. Today, it is an unique opportunity to profitably invest in property like apart-hotels with high returns.

Investing in apart-hotels with GBH Smart Investment is not just a chance to protect and maintain the real value of your assets, but also an opportunity to receive regular passive income in a stable currency and protected from inflation. The minimum investment is 13,500 euros. The investor’s income is determined by the profit that the hotel generates. The key factor is that regular monthly payments are made the next month after the investment was made.The expected return on investment, which depends on the location and occupancy rate of the apart-hotel, is indicated in the profile of each property. On average, the expected rate of return is 7.5% – 24% per year. It consists of a monthly paid rate of return of 7.5-15% per year calculated based on the profit generated by the hotel, as well as of an increase in the market value of the property by 5-9% per year.

What are the main advantages of investing with GBH Smart Investment?

Investing in apart-hotels with GBH Smart Investment is much more profitable than bank deposits with an average rate of 3-6% per year and safer, given the current state of the banking sector. Compared to mutual funds, investment in real estate is much more transparent, since the investor selects a particular property and receives complete information about it before the transaction. Unlike exchange-traded products, investment in real estate is more profitable and provides a return of 7.5-24% per year, taking into account the growth in the market value of the real estate. When investing in commercial real estate, the buyer bears lower inflationary and devaluation risks (the risk of depreciation of the national currency), since the value of real estate grows with inflation and is re-evaluated taking into account the current economic situation. 

Among other advantages, it is worth paying attention to the following:

 

Flexibility and convenience of investing

  • the possibility to exit the project by selling the shares;
  • the possibility of redistributing property through selling the shares;
  • the possibility of getting a loan against investment shares.

Property Protection

  • GBH Smart Investment is not related to the debts of the management company and shareholders;
  • restriction of access to the information on the owners of the assets.

High level of monitoring of the investment 

  • a tight supervision by the supervisory and regulatory authorities 
  • control over the disposal of the fund’s property by a specialized depository;
  • mandatory disclosure of information;
  • a clear frequency of the independent audit of the fund and its assets established by the law
  • the property of the project is recorded by the management company on a separate balance sheet.

Safety of financial transactions

  • Transferred funds are kept in a special bank account of GBH Smart Investment and can only be transferred with the purpose of the acquisition of investment shares. If the required amount is not collected, all money is returned to the investors without a commission;
  • Investor’s income is automatically paid monthly by an independent management company;
  • The property of the mutual fund cannot be recovered even through a judicial proceeding.

How is the investor’s income generated?

The investor’s income is generated from the profit that the apart-hotel makes. On average, it is 7.5% – 24% per year and consists of a monthly paid rate of return of 7.5-15% per year and a growth rate. 

When return on investment is paid out?

Return on investment are paid out monthly. Monthly payments start the next month after the investment was made.

What taxes are levied on investment income?

The system of receiving a return on investment with GBH Smart Investment is completely transparent. Investor’s income tax on redemption of shares or on interim investment income is:

– 19-23% – for resident individuals;

– 25% – for resident legal persons.

– 19% – for non-resident individuals.

For non-residents, the tax rate is determined by the agreement or convention, provided that the non-resident individual is a resident of the country that signed an agreement or convention about the avoidance of double taxation. Deferred payment of income tax allows reinvesting the full income received from transactions with the property of the fund before the shareholder receives the income (redemption of shares, payment of interim income).

Asset purchase

Who can invest in GBH apart-hotels?

Both Spanish citizens and non-residents can invest in GBH Smart Investment apart-hotels.

Moreover, investments can be made by legal persons of any country. Taxation of investors depends on their residence.

What is the process of investing with GBH Smart Investment?

  1. Select a property from the catalog and determine the amount of investment.

2 Fill out and submit your application on the GBH Smart Investment website.

  1. Agree on a presentation of the property and other necessary information with a GBH Smart Investment representative
  2. Get the required package of documents
  3. Transfer funds to a special bank account of GBH Smart Investment
  4. Sign the contract and official notification of the transfer of the share in the selected property

 

Who can invest in GBH apart-hotels?

Both Spanish citizens and non-residents can invest in GBH Smart Investment apart-hotels.

Moreover, investments can be made by legal persons of any country. Taxation of investors depends on their residence.

 

What is the process of investing with GBH Smart Investment?

  1. Select a property from the catalog and determine the amount of investment.

2 Fill out and submit your application on the GBH Smart Investment website.

  1. Agree on a presentation of the property and other necessary information with a GBH Smart Investment representative
  2. Get the required package of documents
  3. Transfer funds to a special bank account of GBH Smart Investment
  4. Sign the contract and official notification of the transfer of the share in the selected property

 

What taxes are levied on the investment income?

The system of receiving returns on investment with GBH Smart Investment is completely transparent. Investor’s income tax on redemption of shares or on interim investment income is:

– 19-23% – for resident individuals;

– 25% – for resident legal persons.

– 19% – for non-resident individuals.

For non-residents, the tax rate is determined by the agreement or convention, provided that the non-resident person is a resident of the country that signed an agreement or convention about the avoidance of double taxation. Deferred payment of income tax allows reinvesting the full income received from transactions with the property of the fund before the shareholder receives the income (redemption of shares, payment of interim income).

What taxes are levied on the monthly income received by an investor who is a foreign legal person that does not carry out activities in Spain through a permanent mission?

The Management Company, as a tax agent, is required to withhold an income tax from the investment income at a rate of 19% (if there is a double taxation agreement between Spain and the jurisdiction where the foreign company is registered, the tax rate may be reduced)

What taxes are levied on the monthly income received by an investor – a Russian legal person?

A Russian legal person, or any other, will be required to include the monthly income received in the tax base and pay an income tax at a rate of 19%.

What taxes will the investor be required to pay in case of exit from the project and sale of shares?

In case of exit from the project and sale of shares, the investor will be obliged to pay personal income tax (for individuals) or corporate tax (for legal persons) from a positive financial result (profit) received from the sale of shares.

For the purposes of taxation, how is an individual defined as a resident of Spain?

Any individual living in Spain for more than 183 days automatically receives a tax resident status. In this case, he is obliged to declare in Spain all his income received worldwide and pay an income tax. However, a person can prove to the tax office that he is a tax resident of another country, even if he lives in Spain for more than 183 days a year:

– if the center of his economic interests is in another country, for example, the main business that generates most of the income;

– if the spouse and/or under age dependent children officially live in another country

However, the last point also works in the opposite direction. If a person lives in Spain for less than 183 days a year, but his family lives here permanently, the tax service can consider him a tax resident and oblige him to pay taxes unless the contrary is proved. A certificate of a tax residence issued by the relevant state authority will be considered as the only valid proof of a tax residence in another country.

Who has to pay a property tax and land tax?

According to the Spanish Tax Code, real estate is subject to a property tax and land tax in relation to the owner of the property. The property tax and land tax are included in the objects of expenditures of the Management Company before the distribution of income between investors.

Are there any features of taxation of legal persons?

For individual entrepreneurs in Spain, it is possible to use several tax accounting regimes:

  • A general regime, similar to that of legal persons, when an entrepreneur conducts full accounting under the Commercial Code and the General Accounting Plan. This regime is mandatory for entrepreneurs whose turnover for the previous year exceeded 600,000 euros.
  • A modular regime that involves paying a tax on imputed income depending on the type of activity without having to keep a full record of income. The tax rate is calculated based on coefficients and limits established by the government for specific types of economic activity, and does not depend on the actual income received. This regime can be used only by those entrepreneurs whose income for the previous year did not exceed 250,000 euros. Moreover, this taxation regime can be applied only to a closed list of activities determined by the government.

Why is it convenient to invest with GBH Smart Investment?

  • the possibility to exit the project by selling the shares;
  • the possibility of redistributing property through selling the shares;
  • the possibility of getting a loan against investment shares.

How did GBH Smart Investment organize property protection?

  • GBH Smart Investment is not related to the debts of the management company and shareholders;
  • restriction of access to information on owners of the assets.

How GBH Smart Investment is monitoring the investment ?

  • a tight supervision by supervisory and regulatory authorities 
  • control over the disposal of the fund’s property by a specialized depository;
  • mandatory disclosure of information;
  • a clear frequency of the independent audit of the fund and its assets established by the law
  • the property of the project is recorded by the management company on a separate balance sheet.

How does GBH Smart Investment implements financial transactions security?

  • Transferred funds are kept in a special bank account of GBH Smart Investment and can only be transferred with the purpose of the acquisition of investment shares. If the required amount is not collected, all money is returned to investors without a commission;
  • Investor’s income is automatically paid monthly by an independent management company;
  • The property of the mutual fund cannot be recovered even through a judicial proceeding.

Gross rental income – a total annual income of the enterprise received as a result of the lease of the property and calculated in monetary terms.

Fiduciary management –  a service for asset management on the basis of the rules of a closed mutual investment fund and an agreement with a management company, aimed at implementing clients’ orders related to investing in a particular real estate

Due Diligence (DD) — a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential.

Investor – a legal or natural person who invests own, borrowed or otherwise attracted funds in assets that present financial interest in order to obtain additional income

Investment Committee – a collegial body consisting of investment professionals that select assets for investment and approve investment strategies

Investment item – any business item acquired with the goal of generating income. In the case of GBH Smart Investment – real estate properties located on the site

Investment risk – a probability of a partial or complete loss of invested funds, which can be caused by various reasons, including force majeure

Investment memorandum – a document containing structured information for potential investors

A share – a security certifying the rights of its owner to a share of the property. Accounting of rights for investment shares is carried out by a specialized registrar in personal accounts in the register of owners of investment shares

Capitalization of an asset is a process that determines the relationship between future income and the current value of an asset

Property management fee – money paid to a management company for a set of actions aimed to achieve an effective functioning of the client’s investment item.

Transaction fee – an one-time payment charged for organizing the process of structuring a property

Commercial real estate – buildings, facilities or land used for commercial activities with the subsequent extraction of constant profit or capital gain from rent or resale

Liquidity – the ability of assets to be quickly sold at a price close to market

Personal income tax (PIT) is the main type of direct tax calculated as a percentage of the total income of individuals less documented expenses, in accordance with current legislation

Report of the operating company of the property – a monthly report on the revenues and expenditures

Report of the management company of the fund – a quarterly report on the revenues and value of the fund’s property

Rules of fiduciary management – is the main document of the fund containing the terms of the contract of fiduciary management of the fund; it defines the rights and obligations of the management company and shareholders, the procedure for the acquisition and redemption of shares, the procedure for the structuring of the fund. The rules of fiduciary management of the fund are developed by the management company based on the Model Rules

Share price – a value determined by dividing the price of the fund’s net assets by the number of investment shares

Net Asset Value (NAV) is the difference between the assets and liabilities of a fund.

Fund’s assets are property (securities, deposits, cash, etc.) and receivables; fund’s liabilities – are accounts payable and reserves for future expenses and payments

Funding period – a period between the start and the end of the collection of funds for the acquisition of real estate

Return on investmentis a financial metric of profitability, a ratio of the gain from an investment relative to its cost

Rental income – income from leasing a property less the costs of its maintenance

Property value – the most probable price that can be obtained when selling a particular property

Property Management Company – GBH Hoteles & Apartamentos – a company that manages rental relationships and operation of the property as a means to obtain profit and  act in the interests of investors

Property Funding – A fundraising process for acquiring a property

Net operating income – the difference between gross income and gross expenses of a property

Operating costs – costs associated with the operation of the leased property. The cost structure is determined individually for each leased property

What are the functions of the Management Company?

  1. Profits
  • setting and achieving targets
  • placing the property on the popular online booking channels, such as Booking, Airbnb, Expedia and many others;
  • ensuring high rating and reputation of the property on the online booking channels. This affects the level of sales.
  • partnership with travel agencies and companies;
  • promotion of the apart-hotel on social networks;
  • ensuring an average annual occupancy rate of not less than 70-85%.
  1. Administrative activities
  • staff recruitment and training, providing high-quality service;
  • furnishing rooms with all components – furniture, equipment, textile accessories, dishes. In the case of an operating hotel – maintaining the existing furniture and changing if necessary;
  • technical maintenance of the hotel
  • building treaty relations and cooperation with external companies involved in the economic activities of the hotel (laundries, supplies of consumables);
  • interaction with public utilities, management companies;
  • cost optimization.

Such a system is focused on long-term asset management to obtain the most stable income that is protected from temporary fluctuations in the market, rather than on short-term projects in the real estate market.