The Spanish Tax Agency, coinciding with the summer campaign, has published an information statement reminding taxpayers of the taxes applicable to tourist rental activity and the different taxes concerned.
What constitutes a tourist rental?
Tourist rentals are included under the legal framework of leases for non-residential purposes, that is to say, leases that pertain to a building whose primary purpose is a use other than to satisfy a tenant’s need for permanent housing.
Therefore, the temporary transfer of the use of the complete house, furnished and equipped for immediate use, available through tourism marketing channels and carried out for lucrative purposes, will be treated as a tourist rental and will be subject to a specific regime in accordance with the Urban Rental Law. This activity should be differentiated from the services provided by the hotel industry, which are those that offer additional services to customers, such as restaurant, reception, cleaning and periodic changing of bed and bath linens during the rental period, or other similar services.
Having clarified the concept of tourist rental, let’s take a look at each of the different taxes.
Tax on Economic Activities (IAE)
The mere exercise, in national territory, of the economic activity that constitutes a tourist rental implies the obligation to register for the Tax on Economic Activities (IAE) in accordance with article 78 of Royal Legislative Decree 2/2004, of 5 March 2004, which approves the revised text of the Law Regulating Local Tax Agencies (TRLRHL).
Depending on the services provided, the activity will be classified into:
Non-hotel tourist apartments (Section 685): in which accommodation activities are provided, namely the transfer of the use of the housing with additional services, such as restaurant, reception, cleaning and periodic changing of bed and bath linens during the rental period, or other similar services. This is applicable to accommodations provided in rustic properties, rural houses and lodges in rural areas, as well as youth hostels, apartments and the like that do not have the condition of hotels or motels, hostels or boarding houses, inns or guest houses, hotel-apartments or organized companies or agencies operating private apartments, or campsites for tourists.
It should be noted that if the accommodations listed in Section 685 remain open for less than 8 months a year, the charge Rate will be 70% of the charge indicated therein.
Housing rentals (Section 861.1): in which the housing is rented for period of time, without the provision of any accommodation services. In this case, when the corresponding tax payable is less than 601.01 euros, the tax will be zero and the filing of a tax return will not be required.
Leasing of buildings (Section 861.2): in which the person or entity owning a tourist apartment leases it to an entity or other natural person for its operation as a non-hotel establishment, contracting its occupation with tour operators and/or the necessary personnel and assuming all the operating risks.
In any event, it must be taken into account that resident individuals and corporate tax payers, as well as civil companies and entities of Article 35.4 of General Tax Law 58/2003, of 17 December 2003 that have a net turnover of less than 1,000,000 euros are exempt from IAE, and therefore have no obligation to register for the tax or to pay taxes on the same, not with standing obligations of a census nature.
Personal Income Tax (IRPF)
Taxation on personal income tax will depend on the classification of the activity:
Housing rentals (Section 861.1): without the provision of any accommodation services.
- Income will be considered as Income from Real Estate Assets.
- The 60% reduction corresponding to rent intended for permanent housing for tenants will not be applicable.
- The periods of time in which the property is not rented will be taxed at 2% or 1.1% (if the value was revised in the previous ten tax periods) of the assessed value in proportion to the number of days that it has not been used for tourism or lease purposes.
Non-hotel tourist apartments (Section 685): with the provision of additional restaurant, reception and cleaning services and periodic changing of bed and bath linens during the rental period, or other similar services. In this case, income will be considered as Income from Economic Activities.
Value Added Tax (VAT) and Onerous Property Transfer Tax
Depending on how the activity is classified:
Housing rentals (Section 861.1) without the provision of any accommodation services.
- Rent is subject to and exempt from VAT. The lessor does not have to present or pay VAT.
- The rent is therefore subject to Onerous Property Transfer Tax by applying the rate established by the Autonomous Community to the taxable amount. In the absence of regional regulation, as is the case in the Community of Madrid, the following will be applied:
|Up to 30.05 euros||0.09|
|From 30.06 to 60.10||0.18|
|From 60.11 to 120.20||0.39|
|From 120.21 to 240.40||0.78|
|From 240.41 to 480.81||1.68|
|From 480.82 to 961.62||3.37|
|From 961.63 to 1,923.24||7.21|
|From 1,923.25 to 3,846.48||14.42|
|From 3,846.49 to 7,692.95||30.77|
|From 7,692.96 onwards, 0.024040 euros for each 6.01 euros or fraction.|
(Article 12.1 of Royal Legislative Decree 1/1993 of 24 September 1993)
Non-hotel tourist apartments (Section 685): with the provision of additional restaurant, reception and cleaning services and periodic changing of bed and bath linens during the rental period, or other similar services. Rent is subject to VAT and is taxed at a rate of 10% in accordance with the criteria of the General Directorate of Taxes (Consultation DGT V0714-15).
Non-Resident Income Tax
The Conventions to avoid double taxation signed by Spain give it the power to tax income from real-estate property located in Spain. On the basis of this recognition, in accordance with Spanish internal regulations, the income that is directly or indirectly obtained from real estate located in Spanish territory or from rights relating to the same is subject to taxation, differentiated according to the section in which it is classified.
Housing rentals (Section 861.1) without providing any accommodation services.
- Income will be considered as Income from Real Estate Assets.
- The income to be declared is the full amount received from the lessee, without deducting any expenses, except in the case of tax payers resident in another EU Member State, Iceland or Norway.
- The applicable tax rate is 24%, except in the case of taxpayers resident in another EU Member State, Iceland or Norway, where it is 19%.
Non-hotel tourist apartments( Section 685): with the provision of additional restaurant, reception and cleaning services and periodic changing of bed and bath linens during the rental period, or other similar services:
- Income will be considered as Income from Economic Activities obtained under Permanent Establishment (PE) if a person employed on a full-time contract basis is available or provided through subcontracting to third party providers of the additional services. The deduction expenses and bonuses will be allowed.
- The applicable tax rate will be 25%.
Since 2018, persons or entities that intermediate in the transfer of use of housing for tourism purposes (“including collaborative platforms”) and seasonal rentals have an obligation to provide the Tax Agency with information regarding the following data on a quarterly basis, except for 2018, for which the intermediation will be filed between 1 and 31 January 2019:
- Owner of the home.
- Owner of the right by virtue of which the house is transferred (if different from the owner of the property).
- Identification of the assignee persons or entities.
- Property to be transferred.
- Number of days of use of the housing for tourism purposes.
- Amount received by the right-holder assigning the right.
- Contract number assigned by the intermediary.
- Starting date of the transfer.
- Date of intermediation.
- Identification of the means of payment used.