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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What is classed as a tourist dwelling in Spain?

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TOURIST DWELLINGS

Published on 08/03/2016 by Jaime Morales/Teresa Morales

 

TOURIST DWELLINGS

 

Characteristics of tourist dwellings:

 

  • Dwellings located in Andalusia in buildings that comply with any of the following:
     

 

  • The distance between the building and the beach (ribera del mar) is 500 metres or less.
  • The distance between the building and the beach (ribera del mar) is between 500,01 metres to 1000 metres,  as long as the access to the beach is less than 1.500 metres.
  • The building is in a town or development (núcleo de población) with a number of inhabitants, according to an updated census, over 20.000.
     

 

  • The only service offered regularly is as holiday accommodation lodging;
  • They are offered and promoted through tourism channels in exchange for money. Tourism channels = travel agencies, companies that intermediate or organize tourism services and channels which include the possibility of booking online.  

 

 

 

Types of tourist dwellings:

 

  • Complete. Capacity: maximum 15 paying lodgers.
  • Per rooms. The owner has to live in the property. Capacity: maximum 6 paying lodgers.

 

In both cases, no more than 4 paying lodgers are allowed per room.

 

 

 

Requirements for tourist dwellings:

 

  1. First Occupancy Licence or equivalent document.
  2. Ventilation of the rooms to the exterior or patios and shutters on windows*.
  3. Furnished rooms fully equipped according to the number of lodgers.
  4. Air conditioning in every bedroom and living room if the dwelling is offered between May and September and heating if it is offered between October and April*.
  5. First aid kit.
  6. Tourist information about the area, amenities, restaurants, cafes, shops, groceries stores and the closest parking areas, medical services, urban transport, map of the area and guide of local shows.
  7. Complaints book and a visible poster of its availability.
  8. Cleaning service at the entry and exit of new lodgers.
  9. Bedding, linen and household appliances according to the number of lodgers and a spare set.
  10. Phone number in order to immediately solve any problem or question related to the dwelling.
  11. Information and instructions on how to use the appliances and devices of the dwelling.
  12. Information on the use of the installations, rooms and facilities of the dwelling, about pets and smoking restrictions.

 

* Requirements b) and d) will not be required when the property or building in which it is situated is grade listed and the level of protection does not allow any of the building works, modifications or interventions required to comply with the above conditions.

 

 

 

Registration code:

 

Owners must register their properties at the Andalusia’s Tourism Registry as “tourist dwellings” by filing an application form with the Consejería de Turismo where their dwellings are located. Once they are registered, the owners will receive a registration reference code which must be quoted on all advertisements where the dwelling is offered.

 

 

 

Consequences of non-registration:

 

If owners begin the tourist activity without registering their properties as “tourist dwellings” with the Andalusia’s Tourism Registry, it will be dee0med a clandestine activity and a serious offence with penalties ranging from 2.001 euros to 18.000 euros. Additionally, they can be punished with the suspension of the tourist activity for less than 6 months or the closure of the accommodation for less than 6 months.

 

 

 

Dwellings excluded from this regulation:

 

  • Dwellings offered regularly as holiday accommodations free of charge.
  • Dwellings used by the same lodger for a continuous period of time over 2 months.
  • Dwellings located in rural land or environment, which means the number of inhabitants of the town or village (núcleo de población) where the dwellings are, according to an updated census, is under 20.000 people and the distance between the building and the beach is more than 1.000 metres or, if the property is between 500,01 metres to 1.000 metres but the access to the beach is more than 1.500 metres.
  • Groups of 3 or more dwellings located in the same building or group of buildings contiguous or not owned by the same person.  

 

 
Photo by Humphrey Muleba on Unsplash

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What is Classed as a rural tourism dwellings in Spain?

RURAL TOURISM RENTAL DWELLINGS

Published on 08/03/2016 by Jaime Morales/Teresa Morales

RURAL TOURISM RENTAL DWELLINGS

Rural tourism rental dwellings are subject to Law 13/2011 of Tourism in Andalusia (article 48) and Decree 20/2002 of Tourism in a rural setting and active Tourism (article 19). According to this legislation, rural tourism rental dwellings are:

  • Dwellings located in what is classified as rural land or environment*,
  • Dwellings are totally independent, including dependent buildings such as harness rooms, stables, sheds and others of a similar nature;
  • they are offered to the public for seasonal or temporary use or to be used occasionally, once or more times in the year, without exceeding 3 months per year in total (if it exceeds it, the property will be considered as a rural house);
  • the only service they offer is lodging;
  • there cannot be more than 3 households in the same building;
  • the lodging capacity cannot exceed 20 people.

*Properties are located in a rural land or environment if:

  • The number of inhabitants of the town or village (núcleo de población) where the properties are, according to an updated census, isn’t over 20.000; and
  • the distance between the accommodation and the beach (ribera del mar) is more than 1.000 metres; or if the property is between 500,01 metres to 1.000 metres from the beach but the access to the beach is more than 1.500 metres.

The minimum infrastructure requirements for rural tourism dwellings are the following (Annex II Decree 20/2002):

  1. Signposted access, providing the lodgers with the necessary information through a map or plan of its location. The path must be practicable for vehicles; if it’s not, the owner will have to facilitate the transport to and from the accommodation.
  2. Drinking water. They must have a storage tank over 200 litres per lodger if the supply is not provided by the municipal water network.
  3. Electricity.
  4. First aid kit.

Other requirements these properties must comply with (Annex III Decree 20/2002):

  • Living room / dining room:

Living room / dining room which caters for the maximum capacity of the accommodation, furnished according Andalusia’s rural aesthetics, with a minimum area of 12 m2. It can be divided into two different rooms.

When properties are rented during the winter season (October through to April, both inclusive) heating must be made available.

  • Kitchen:

Area according to the property’s capacity. It must be fitted with burners or electric hob, oven or microwave, fridge, dishes, cutlery, glassware, kitchen and household appliances, sink and drainer with hot and cold running water. In addition, the kitchen must have direct or forced ventilation.

  • Bedrooms:

Individual rooms’ area: 7 m2 minimum; double rooms’ area: 10 m2 minimum. For each additional lodger: 4 m2. Terraces and bathrooms are excluded from this area. The area occupied by wardrobes can be included.

The rooms will have a table and bed for each lodger. If the bed is individual: 90 x 180 cm (minimum); if it is double: 135 x 180 cm (minimum). The bed bases must be rigid. The use of of wool or foam mattresses is not allowed. Light point next to beds.

A wardrobe per 4 lodgers with adequate hangers. It can be located in any of the rooms.

Ceiling height: 2 metres minimum. This minimum height must be the same in at least 70 per cent of the surface of attic rooms.

Lighting and ventilation must be to the exterior or to a ventilated courtyard. In no case the ventilation can be assisted. The windows will have blinds or shutters to obscure them when necessary.

When properties are rented during the winter season (October through to April, both inclusive) heating must be made available.

Access to the room through common elements. In no case rooms will be accessible through another room.

Clean sheets and bed linen once a week according to the number of lodgers.

  • Bathrooms:

The properties will have a complete bathroom per 6 lodgers or fraction. The bathroom will have hot and cold water, sink, bathtub or shower, toilet, mirror, towel rack, shelf for bathroom articles and clean bath linen once a week according to the number of lodgers. It must be located in the same building as the rooms and have direct or forced ventilation.

Hot water supply must be enough to ensure personal hygiene of all the lodgers, including shower of them during an hour.

Moreover, if the properties are going to be rented by rooms (shared), apart from the requirements above, the rooms will need to have a chair per 2 lodgers, a table and its own wardrobe. The bathroom will be exclusive for the lodgers. However, a kitchen won´t be required.

 

Owners must register their properties at the Andalusia’s Tourism Registry as “rural tourism rental dwellings” by filing an application form with the Consejería de Turismo where their dwellings are located. Once they are registered, the owners will receive a registration reference code which must be quoted on all advertisements where the dwelling is offered.

If owners begin the tourist activity without registering their properties as “rural tourism rental dwellings” with the Andalusia’s Tourism Registry, it will be deemed a clandestine activity and a serious offence with penalties ranging from 2.001 euros to 18.000 euros. Additionally, they can be punished with the suspension of the tourist activity for less than 6 months or the closure of the accommodation for less than 6 months.

Photo by Javier Rincón 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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