TAX & VAT RATES FOR TOURIST DWELLING RENTALS IN SPAIN

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VAT RATE TOURIST DWELLINGS RENTALS SHOULD BE TAXED AT

Published on 25/10/2016 by Jaime Morales

BINDING CONSULTATION NUMBER V0600-15, OF 17TH FEBRUARY 2015, FROM THE TAX OFFICE (DIRECCIÓN GENERAL DE TRIBUTOS), ON THE VAT RATE TOURIST DWELLINGS RENTALS SHOULD BE TAXED AT

 

  1.                   RELEVANT LEGISLATION

Law 37/1992, of 28th December, on Value Added Tax (BOE of 29th December). Hereinafter, VAT Law.

Resolution of the Tax Office (Dirección General de Tributos) of 28th December of 1986 (BOE of 19th December).

 

  1.                 BACKGROUND

The enquiry number V0600-15 is raised to the Tax Office (Dirección General de Tributos) by a natural person who owns a property classified as “tourist dwelling” and who is officially registered as this kind of tourist activity.

Such enquiry concerns the question of the VAT rate on tourist dwellings rentals, rented to both persons or companies, should be taxed dependant on whether these rentals include or not complementary services of the hotel industry.

 

III.                ANSWER

The Tax Office (Dirección General de Tributos) bases its answer on the Articles 4, 5, 11, 20.One.23º, 90 and 91.One.2.2º of the VAT Law and on the Resolution of the Tax Office (Dirección General de Tributos) of 28th December of 1986.

In response to this query, the Tax Office (Dirección General de Tributos) makes a distinction between different types of leases based on the intervening subjects, on the use given to the property and on the possibility of the owner offering complementary services of the hotel industry.

But, firstly, the Tax Office (Dirección General de Tributos) clarifies what is understood by “complementary services of the hotel industry”. The VAT Law gives some examples of these services: restaurant, cleaning, laundry or others of a similar nature (Article 20.One.23º.e). They are services which complement the accommodation service such as:

  •     Weekly cleaning service of the apartment.
  •     Weekly bedding and linen changing service of the apartment.

However, the following services won’t be considered as complementary services of the hotel industry:

  •     Cleaning service at the entry and exit of each rental period.
  •     Bedding and linen changing service at the entry and exit of each rental period.
  •     Cleaning service of the common areas of the building and the housing estate (entrance, stairways, elevators, green areas, access, pavements, streets).
  •     Technical assistance and maintenance for eventual repairs of plumbing, electricity, glass, shutters, locksmiths and household appliances.

 

Secondly, the Tax Office (Dirección General de Tributos) comes to the following conclusions:

1)  If a person rents the property he/she owns directly to another person, who will use it for living, without offering complementary services of the hotel industry, the lease will be exempt from VAT.

2)  If a person rents the property he/she owns directly to another  person, who will use it exclusively for living, and offers complementary services of the hotel industry, the lease won’t be exempt from VAT and will be taxed at the rate of 10%.

3)  If a person rents the property he/she owns directly to a company for its operations, the lease won’t be exempt from VAT and will be taxed at the rate of 21%. Arising from this, two situations can take place:

  1. a)  If the company rents the property without offering complementary services of the hotel industry, the lease won’t be exempt from VAT and will be taxed at the rate of 21%.
  2. b)  If the company rents the property offering complementary services of the hotel industry, the lease won’t be exempt from VAT and will be taxed at the rate of 10%.

 

Photo by Joan Villalon on Unsplash 

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