As of February 2, 2016, came into force in Andalusia the formal decree that regulates the housing for rent in Spain for purposes of tourism, which forces those who operate this business to register their property before the Tourism Registry of Andalusia. Therefore, those who already offer a service to tourists shall be able to do it in a more uniform manner relying on the basic amenities, and at the same time, it would be useful for those who are considering the idea to become eligible, thus, preparing their property for tourists.
From May 2016 the free registration is mandatory if you consider renting a tourist holiday house this summer without getting into trouble.
If you are planning to rent in Spain a house or flat for tourists, specifically at La Axarquía, in municipalities such as Alcaucin, La Vinuela, Velez-Malaga or Nerja, you can contact us for accounting or solicitor services related to the registration of housing for tourism. We offer more details about it in this article about this topic.
This initiative aims to clarify the normative and provide legal basis to the tourism industry, considering the alternatives not registered such as “underground offers” that are subject to a penalty fee upon Inspection (such penalty fee could reach 150,000 Euro).
According to this new decree, housing considered for purposes of tourism are those built on residential grounds, which commercialize their accommodation at a price offered though companies or online media to make a reservation. This type of housing must comply with minimum comfort and quality requirements that respect the rights of the guests, and avoid unfair competition within the industry.
Among the services to offer in order to obtain the occupation license are the furniture, tableware, basic household appliances, aside from kitchen implements or tools, ventilation, bed linens, refrigeration, air-conditioning systems, cleaning service (upon entrance/occupation and after departure) and first-aid kit. Tourism information about the area must be provided to guests, at least one phone number to call for contingencies and claim forms.
The decree has left out the houses located in rural areas (which have their own regulation). The rent in Spain for rural housing built on rural land is governed by Article 48 of Law 13/2011 of December 23 that establishes that renting rural tourist housing is subject to that fact that such housing is offered for “its temporary and occasional occupancy with purposes of tourism, one or more times a year, without the days or service provided ever exceeding a total of three months in a year.”
It is also left out in this decree the rental of three or more houses from the same owner that are located within a radius of one thousand meters. In this case, such houses shall be considered as apartments for tourism and governed by their own decree.
Increased Control for Unregistered Rentals
The Treasury Department continues implementing control measures to encourage taxpayers to become aware and start to declare their real income.
The Tax Agency of Baleares has already implemented a mechanism aimed at controlling the money obtained from “unregistered” rentals, which are not declared. This is a provision that clearly states that financial institutions must provide the information regarding the balance on the accounts of its clients to the Treasury Department, based on the opinion of tax technicians who affirm that “the money originated from a rental is not usually kept at home, since it ends up being deposited at the bank.”
Thus, based on model 196 (of 2016) or Informative Statement that represents an “annual summary of the retentions and income deposited on the account for income obtained from capital gains and rents arising from the consideration derived from accounts in all kinds of financial institutions,” the amount of the movements that have been made during the exercise is revealed, in addition to being able to have a residential address if it has been provided.
Therefore, it is the duty of financial institutions to report to the tax agency the total annual income in the accounts of its clients, as well as the amounts they have withdrawn to know if the deposits of an individual exceed the income declared.
Currently, this is an automatic process that does not require the tax agency to request the information, so an alert can come up when the data is received if a taxpayer indicates that he/she only receives the amount of the payroll, while additional amounts that exceed said salary are deposited in his/her account, for instance income received from unregistered rentals.
This measure substitutes the measure previously implemented up to this date, which was a bit more complex since the Treasury Department used to request to the banks the information regarding the amounts deposited in the accounts of the taxpayers at the end of the year “and the mean value of such amount during the last trimester of each fiscal year” to calculate the interests accrued vs. the retentions applied to said individuals.
Flat rentals for tourists in Spain
If you have a home in a touristic area and want to rent it to tourists, you should find an accountant or solicitor to help you with the taxes related to your rental incomes.Before renting your home you must inform yourself if the VAT should be applied to that rent or not.
Digital platforms are very useful if you want to find tenants for your vacation home. But if you choose to use one of these platforms, you must know the conditions of service offered by each one, as this determines the VAT applicable to the rent.
There are different situations in which you can find if you rent your home through a digital platform. That platform may be an intermediary or may sublet the dwelling. The tax return situation is different in each of these assumptions.
If the platform you use is an intermediary, their service is to put owners and renters in contact. Therefore, it will count as a traditional rental. You are the landlord and this rent is exempt from paying VAT.
In case the platform leases the house and then surrenders it to a tenant, it is a sublease. When someone, in this case, the platform, rents a house with a purpose other than living in it, a 21% VAT must be applied to the rent. Therefore, you must register in the Spanish Tax Authorities under the heading 861, “House rental”, and issue invoices in charge of the platform, with a VAT of 21%.
7 Tax-deductible expenses for House Rentals in Spain
In Malaga province there are many foreign people, both Fiscal residents and Non residents who rent out their houses. The tourists choose towns such as Nerja o Torrox, to spend their vacations in Spain.
Renting out a house in these areas is very common and can cause legal consequences The same can apply when selling or buying a property and an expert lawyer should be used for the conveyancing.
What is more interesting for homeowners? Leasing or selling? Undoubtedly, leasing is more interesting.
The main reason is very simple. If you own a house and sell it for 100,000 Euros, bank will not currently offer you more than a 0.3 % fix term deposit for this amount of money; however, the annual gross return of housing rentals is currently around 5 %.
The main expenses which may be deducted when leasing a house are briefly listed below:
- Interests from bank credits paid for the property purchase.
- Maintenance and repair costs, which do not include any amount aimed at expanding or improving the housing conditions.
- Taxes affecting rental return and housing.
- Costs resulting from the contract execution and legal defense.
- Insurance policies (civil liability, fire, theft, glass breakage, etc.).
- Amounts allocated to pay electricity, water, gas, telephone bills.
- Amount earmarked for housing amortization when meeting an effective depreciation.
All this means that it is a good time to invest in housing for rent, basically for small investors. Prices of apartments have started to rise, but very slowly, as well as rental prices.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Author: Rosana Tejada
Biographical Info: Rosana Tejada Crespo is a tax advisor holding a Master’s Degree in International Taxation. She specialises in companies and freelancers, tax regulations concerning foreign employees (Beckham Law), non-resident tax, inheritance tax and Spanish income tax. She is one of the founders of Legal & Tax Help (2000), which comprises a group of English speaking solicitors, economists and architects.