It’s a property where there are the following conditions:
– When there is a compensation for the use.
– When there is immediate availability of the apartment.
– When the “use” or “destiny” of the apartment is “touristic”
– When it is done on “regular basis“. Regular basis means that you are in ONE of the following cases
– When the rent is managed by big touristic operators/companies
– When you publish the property in touristic channels (internet, newspapers, etc).
– When even not being “a company”, you make some of these services: property maintenance and repairing, room service, cleaning apartment, toilets, etc, washing private clothes or apartment equipment (sheets, towels, etc.), luggage custody, etc.
So, when you are renting your property for “residential” purposes, with medium-long term of families or individuals renting it for “living” and not for “tourism”, then, your property is out from this “touristic property” regulation. “Residential rents” will be regulated by the general law of renting (or “Ley de Arrendamientos Urbanos”). So, you will not need to follow these formal requirements of registration, But, as explained below, you will need to declare your rental incomes for Spanish taxes.
–Registration in the Holiday Rental Valencian Registry (HRVR).
– If you only rent from one to 4 properties, then, you have to register as a “particular”.
– If you rent more than 4 properties, then, you have to register as a “company” or “business dealer”.
But, even in the case you decided not to register your property in the registry from Valencia, your property must fulfill with the legal standards of quality and equipment as in the following section.
CERTIFICATE OF URBAN COMPATIBILITY: Since the entry in force of the Law 15/2018 in June 7, to obtain the touristic license, a report from the Town Hall of the area is required. This report is called: “Certificado de Compatibilidad Urbanística”. This document is issued by the Town Hall and confirms that the property fullfils the requirements from the construction laws to develop the touristic activity.
Legal standards of quality and equipment:
Every property, registered or not registered, offered in the market as rent for touristic purposes, must fulfill the requirements established in the law for any of the classifications considered: “Standard”, “Primary” or “Superior”. In order to register the property, it may get, as minimum, the “Standard” requirements.
The annex of the law details the requirements from each of these classifications, in terms.
As well as the requirements established by the law, properties will be offered to clients in perfect conditions of habitation, conservation, clean, and will all utilities and services ready for the first day of occupation.
Owners cannot demand more than 250 EUR to clients as per deposit/bond/guaranty, except if buyers expressly agree with a higher amount.
Habitation License / Certificate of habitation required
The Property must have the certificate of habitation (“Licencia de ocupación” or “Cédula de Habitabilidad”), and it must be equipped with all whitegoods, and equipment to be used in perfect conditions and perfect higyene.
Houses in rustic land requires changing classification of the land
If the property is placed in rustic land, then, the classification of the land must be changed to allow this use. This is a very complicated process called “Declaración de Interés Comunitario”, where the Town Hall, with audience to regional government, accepts the change of use on the land.
OTHER FORMAL OBLIGATIONS:
In addition to the eventual formal and tax obligations as required by the law, we specially recommend you the following:
- Architect certificate: It is very important to obtain advice by specialists in order to confirm if the property fulfils with the requirements as per the law. So, it will be necessary and architect to visit the property and to certify if the property is ready to be rented and to prepare an EMERGENCY PLAN.
- Energy Performance Certificate: Recent Spanish normative forces landlords to get an Energy Performance Certificate to renting properties. So, this certificate must be obtained before offering the property in the market for renting it. Click here to more information about Energy Performance Certificate requirements.
- House insurance: As landlord, we specially recommend you to contract an insurance to cover container, contents, and civil responsibility. Click here to know more about insurance when renting.
If you have already contracted an insurance for your property, and then you decided to rent it, then it is very important you INFORM to insurance company about this fact. Otherwise there will be high possibilities the insurance company does not cover damages created by non-declared activities.
a) Format: You have to fill the official form. Click here to get it. Please, note that this form is a “declaración responsable” (or “declaration of responsibility”) where you declare, and CONFIRM under your own responsibility, that the details and information included are TRUE, being direct responsible of the content included.
So, if the information contained is not correct (for example, you declare that the minimum size of the bedrooms are 8 m2, when they are less in real), you may be responsible from false testimony, fraud, etc.
Thus, if you are not 100 % sure that your property requires ALL the conditions to arrive to a “Standard”, or to see if your property may be a “Premium” one, then, contract the services of an architect to make a survey and to check and certify that you that your property fulfills these conditions.
b) Registration. Once the format is filled, you have to present it in one of the Valencia Government offices in Alicante, Valencia, or Castellón:
You will receive a document to confirm the registration of is complete. Obtained the registration number, you have to register it in ALL the publicity, formats, contracts, etc derived from your activity.
Offering services without the obligatory registration may have the following consequences:
– Fines up to 90.000 EUR
– Suspension of the activity on that property up to 3 years
– Suspension of the activity to the owner up to 3 years
Must I inform and advertise my registration number when advertisign the property?
YES. Your registration number must be shown in all kind of information, publicity, advters, etc. e registration number assigned to each dwelling.
May I rent my property only for rooms?
NO. Property must be rented in full, and the owner cannot be living on it.
May I rent the property as an standard SHORT TERM rent?
YES. But, in this way you must cancel the registration in the Touristical registry, because the law does not admit adverts of “standard rents” in touristical channels. When deciding to rent the Property, there are two ways:
- Registering in standard rent. It means a rent in short or long.term period, and subjected to a rental contract and use out of touristical use. In this ways, the house cannot be published in the touristical channels (as AirBNB for example).
- Registering for touristical use. In this case, Property can be advert in touristical channels.
Must I keep a Entry’s book for guests?
YES. You need to keep a book where all the customers are recorded, in a format that you must obtain at the local Pólice Station or Guardia Civil from the place where the Property is situated.
When you own a property, and you do not use it as permanent residence, EVERY YEAR, you have to present tax declaration on your property, and this, even if the property is rented, or non rented. And this is done through an ANNUAL TAX DECLARATION.
And, when you rent a property, and you receive an “income”, then, you have to declare in the same moment you receive the income, in a QUATERLY DECLARATION.
When you rent a property, you receive an “income” which is subject of the Spanish “Income Tax” in Spain, which varies depending if you are “Spanish tax resident” or “Spanish non resident”.
If you are resident, then the tax is the Resident Income Tax (IRPF-“Impuesto de la Renta de las Personas Físicas”), and if you are non resident, the tax is the Non-Resident Income Tax (IRPFNR-“Impuesto de la Renta de las Personas Físicas No Residentes).
If you are “Spanish Tax resident”, then you have to declare your rental incomes in our ANNUAL TAX declaration (model 100).
But, if you are a Non-Spanish Tax Resident, then you have to declare your incomes in the Non Resident Income Tax (model 210) in the following way:
– QUATERLY: When you are renting your property, you have the declaration of these incomes in the same quarter of the year in which they are generated. So, here in this post, we have consdiered the case in whcih rent is for “tourism” purposes, but, also, you may rent for “residential” purposes. In both cases, you have to declare the incomes in the correspondent quarter of the yeat.
“Residential rent”: It means, when you are renting for “residential” purposes, with medium-long term of families or individuals renting it for “living” and not for “tourism”.
– ANNUALLY: As resident, or as non tax resident, you have to make the annual declaration of taxes (IRPF /IRPFNR). So, for the periods of time of the year where you are non-renting the property, as non resident, there is a tax to pay, and this is declared in at the end of the following year.
You are non-resident and obtain rent for touristic property in February 2022.
1.- Quarterly declaration: You have to declare that income in the same quarter. Presentations of these declarations must be done before 20 days after the end of the quarter. In the case of the example, the incomes from rent from the quarter January-March, should be declared in the tax declarations to submit before the 20th of April 2022.
The rest of the year 2015 there is not further rent on the property.
2.- Annual Declaration: Then, before the end of the following year, 2016, you have to present the declaration of taxes, and pay for the time that the property has not been rented.
So, please, be informed that, when renting a property for touristic purposes, together with your LEGAL obligation to register your property, you have the TAX OBLIGATION to declare the income QUARTERLY, and then, ANUALLY, for the rest of the year.
Do I have to pay VAT?:
There is a big confusion in the market about this question. Purely, Renting incomes are not subjected to VAT.
So, if you use your property for both, residential or touristic purposes, YOU DO NOT HAVE TO PRODUCE INVOICE, and the transaction IS NOT TAXED BY VAT.
But, this is just in case the incomes you receive are ONLY FOR RENT. But, when you offer other services similar to hotel, like:
– Restaurant, food, breakfast
– Cleaning inside the apartment
– Washing towels, sheets, etc.
In these cases, you have to PRODUCE INVOICE and charge VAT on your service.
The requirements will be:
– Produce invoice to each of your guests
– Charge VAT (10 %)
– Declare VAT quarterly
– Declare VAT annually
– To register as business professional in the Tax office
– To declare Income Tax quarterly
– To declare Income Tax annually
Clarified the above, we will consider now how to pay the incomes received through a holiday home.
To the net amounts received from the rent, in case you are resident in any of the EU countries+Icelnad+Norway, you can reduce:
– The proportional interest (not capital) of the mortgage (or any other type of credit used to buy the property) paid for the acquisition of the property.
– The proportional Council Tax, Garbage collection, House insurance, Community charges, etc.
– The proportional reform, maintenance, furniture, equipment, water, electric, internet, etc.
– Marketing, publicity, lawyers, etc.
– Amortizations of property, furntiure an home appliances
IMPORTANT NOTE: In case you are resident in a country outside EU (USA, UK, Canada, Mexico, Russia, etc), then, you cannot deduct the above expenses from the tax base.
Thus, the most important difference in the SPANISH INCOME TAX FOR NON RESIDENTS are the following:
- EU residents+Norway+Iceland:
- Base of the tax can be reduced from the expenses listed above
- Tax rate: 19 %
- Non EU residents
- Base of the tax CANNOT be reduced by any items. So, the amount of incomes received by rent will be taxed in full.
- Tax rate 24 %
“A” has a house in the Costa Blanca, which is not being used as permanent home, and he decides to rent it through Airbnb, or any other similar platforms.
- Declaring the rent obtained: The house is valued in 150.000 EUR, and the total rent obtained has been of 6.000 EUR in 4 months, May, June, July, August of 2022.
- Council Tax. Yearly is 500 EUR. So, 500/12*4 = 166,6 EUR. This is the proportional amount of Council Tax during the 4 months period in which the house was rented.
- Mortgage interests: “A” has paid that year 1.200 EUR of mortgage interests, so, 400 EUR corresponds to the rental period.
- Community charges: Yearly are 600 EUR, so, 200 EUR corresponds to the rental period.
- Garbage collection: 150/year. So, 50 EUR corresponds to the rental period.
- House insurance: 350/year. So, 33,1 EUR corresponds to the rental period.
- Payment of marketing fees: 300 EUR
- Water, electric, gas, internet: 450 EUR corresponds to the rental period.
TOTAL EXPENSES: 1.599,7 EUR. This will be the total amount that “A” may deduct from the incomes received. So:
6.000 – 1.599,7 EUR = 4.400,3 EUR
The amount of 4.400,3 EUR pays 836,057 EUR in taxes, as per the scale below:
I.- TAX RATE FOR 2022 – Incomes obtained by rent of properties of NON FISCAL RESIDENTS :
- 19% for EU Nationals + Iceland + Norway: From the base of the tax, these nationals can deduct from the following concepts: -electric, water, electric. Council Tax (IBI), community of owners, expenses of reforms, maintaining and repairing of the property, mortgage interests and amortization.
- 24% for NON EU Nationals (USA, UK, Canada, Mexico, etc.): From the base of the tax, these nationals CANNOT DEDUCT ANY of the above expenses, so, the base of the tax is taxed in full at 24 %.
II.- RATE FOR SPANISH TAX RESIDENTS
TAX RATE FOR REGULAR INCOMES
Incomes Tax Rate Up to 12.450 € 19 % 12.450 – 20.200 € 24 % 20.200 – 35.200 € 30 % 35.200 – 60.000 € 37 % 60.000 – 300.000 € 45 % + 300.000 € 47 %
TAX RATE FOR SAVINGS
Incomes Tax Rate Up to 6000 € 19 % 6000 – 50.000 € 21 % 50.000 – 200.000 € 23 % + 200.000 € 26 %
And this declaration of tax should have been done in 2 declarations, made on the proper quarter of the year 2021. In this way:
– The rent obtained in May and June, should have been declared in the quarter declaration made before the 20th of July 2022.
– The rent obtained in July and August, should have been declared in the quarter declaration made before the 20th of October 2022.
- Declaring the rest of the year: As the house is not a permanent home, then, “A” must declare, and pay, for the rest of the year the house is empty. So, this is paid:
– In the annual declaration of Income Tax. If “A” was Spanish resident, before the end of June 2022, and if “A” was non resident, before 31.12.2022.
WHAT HAPPENS WITH THE PROPERTY FOR THE PERIOD WHICH IS NOT RENTED DURING THE YEAR?
In case the property rented is not your PERMANENT HOME, then, you need to pay a tax for the time not rented. This tax is an average of 0,4-0,5 % calculated from the Catastral value, and it is declared before the end of the FOLLOWING year.
In the case of the example, this tax for the “empty” property during the year 2022, should be presented before the end of 2023
- EU residents+Norway+Iceland:
TOURIST RENT NON RESIDENT OWNER – VAT or NOT?
Tax implications on the tourist renting a property in Spain by a NON RESIDENT in Spain.
Purely, the rent of a property is not subjected to VAT. This VAT exemption includes any type of rent:
- Short term rent / Tourist rent
- Medium term rent
- Long term rent
The reason of this is because the Spanish system considers that there is not “business” or “commercial activity” when renting a property (even in terms of Tourist Rent)
But, when we say that the “tourist rent” is not subjected to VAT, we have to consider the following situations:
Case 1.- Non permanent establishment. No business activity
The owner simply rents the property to guests using its own marketing tools, or using other external online platforms as AirBNB, Homeaway, etc.
Contact with guests is directly done by the owner (keys, guest reception, emergency, maintenance, etc.). Online platform only deals with the marketing side and publicity of the rent, booking and also to manage rent payments and collection.
Also, the owner rents the property in no “business” interest, in some periods of the year, reserving for himself a determinate time per year for private use.
The owner may contract local professional services for cleaning, gardening, maintenance, etc, but in “exclusive” activity for the rent and not as employees.
In these cases, the rent will not be subject to VAT.
Case 2.- Non Permanent Establishment – No business activity
The same non resident owner, together with the rent, offers cleaning room service, cleaning of clothes, and even food/drinks.
In these cases, VAT would be in application is when the owner provides “hotel Services” to the guests. In these cases, the VAT in application will be the 10 % and the owner would need to produce separate invoices to guests for these services.
But, which are considered as “Hotel Services”?. Here we have to distinguish between:
- Cleaning and other services which are offered only BEFORE checking , and AFTER the checkout. These services will not be considered as “Hotel Services”, as they are provided to maintain the property in proper use conditions for guests.
- Daily cleaning of room, laundry services for clothes, and food (Breakfast, dinner, etc. ): In these cases, the service is classified as “Hotel Service”, so, VAT will be in application.
Case 3.- Permanent Establishment – Business activity
The non resident owner decides to contract one or more employees in Spain to be at the house for cleaning, maintenance, customer service and reception, keys holding, etc.
In this case, due to the fact that the owner employes a person in permanent basis (social security, labour contract, or permanent professional contract) to specifically destiny his work to the rent, this will be considered as a “business activity”, so subjected to VAT.
In fact, for this reason the owner will be considered as “employer”, in a business activity, and this activity will be considered in Spain a “Permanent Establishment”, so subjected to tax and formal obligations as an non resident entity with Permanent Establishment” in Spain.
Case 4.- Business activity
The same non resident owner, even non contracting an employee in permanent basis, decides to contract the services from a “Renting agent” or “Platform” to cede, contract, or subcontract the rent of the property during the whole or an important period of time during the year, for a determinate payment, compensation or other.
In this case, it is the Agent/Platform who directly deals with guests’ communications, check-in, check-out, maintenance, etc. The owner has not contact with final users/guests from the agent, and it is the platform who has the exclusive access and right if use/rent the property during the rental contracted period.
So, again, the Spanish system will consider that, although the owner has not “business” structure to develop the rent, the same agent/platform contracted has it. So, at the end, the “business” activity is developed, so, the owner will be considered in business, the rent will be considered a business activity, and this activity will be considered in Spain a “Permanent Establishment”, so subjected to tax and formal obligations as an non resident entity with Permanent Establishment” in Spain.
- VAT 21 %
- Retentions 19 %
So, in the both last cases with Permanent Establishment, which are the formal obligations to follow up by the owner? Following the art. 164 from the Ley 37/1992, the following ones:
- Submit declarations relating to the beginning, modification and cessation of activities that determine their subjection to the tax. We call this “registro Censal” as passive subject from the VAT tax.
- Request the tax identification number from the Administration and communicate it and accredit it in the cases established.
- Issue and deliver an invoice for all its operations, adjusted to what is determined by regulation.
- Keep accounting and records established in the manner defined by regulations, without prejudice to the provisions of the Commercial Code and other accounting standards.
- Present periodically or at the request of the Administration, information related to its economic operations with third parties. Quaterly Model 303 (VAT), and Model 115 (Retentions)
- Submit the corresponding declarations-settlements and enter the amount of the resulting tax.
- An annual summary declaration.