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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Spanish Residents with assets and rights located abroad | What I need to know

Information return on assets and rights located abroad -MODEL 720-

Published on 20/02/2013 by Jaime Morales

 

Last Thursday 31st of January was published the Order HAP/72/2013 which establishes the MODEL 720 information return on assets and rights located abroad, referred to the eighteenth additional provision of Law 58/2003 of December 17, General Tax and identifies the location, shape, term and procedure for submission (BOE, 31-enero-2013)

This law requires all residents in Spain having assets and rights located abroad to file the return through the model 720. The period 2012 can be submitted until April 30, 2013.
Photo by Tim Evans on Unsplash

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Buying a second home for renting in Spain … What I need to know

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I am buying a second home in the Costa de la Luz, and am thinking of renting it out on a short-term or possibly a longer-term basis. Do I need a licence to rent it as a holiday home, and what does a contract for a longer-term let need to include?

Published on 06/07/2012 by Jaime Morales Conde Founding partner of the law firm ATKINS&MORALES; Bilingual lawyer (Spanish/English) of the Ilustres Colegios de Abogados (Bar Associations) of Seville and Cadiz, with offices in both cities.

 

Law 29/1994, of 24th November, on Urban Leasing (LAU) establishes two broad categories of leasing: one where the property is used for residential purposes and another for properties which are used by the tenant for a purpose other than as a permanent residence, which includes “seasonal rentals”.

 

In principle, the LAU does not require a licence for seasonal rentals. However, although this may be the case in principle, it is important to point out that if the property has been classified as “Holiday Accommodation for Tourists”, and is therefore regulated by LAW 12/1999, of 15th December, on Tourism in Andalusia, it must be registered on the Tourism Registry of Andalusia, and moreover, if required, the tenant must hold the appropriate licences or permits granted by the relevant competent authorities.

 

In order to protect the interests of the landlord and tenant, the property rental contract must cover all the minimum conditions, as established in Title II of the LAU (term, price, deposit, building work, inventory, etc.) and in the absence thereof, the Civil Code; albeit that the interests of each of the contracting parties must be treated differently, and thus it is advisable to seek specific professional advice in this case.

 

Lastly, in terms of the execution of the contract, the LAU allows the parties the freedom of choosing between an oral agreement, which is not advisable, or in writing. Moreover, the law expressly grants the parties to any rental contract, whatever its term may be, the right to access the Property Registry.

Photo by Johan Mouchet on Unsplash

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