Special Tax Regime Modification for Rental Property in Spain (EDAV)

To promote a real estate market with more competitive prices that would make the right to housing more accessible to citizens, the Special tax regime for rental property (“Régimen especial de arrendamiento de viviendas, EDAV”) was approved in 2003, which implied more attractive taxation for the investors of real estate assets intended for housing.

Corporate Tax Law

Said regime, which is regulated in Chapter III of Title VII of the Corporate Tax Law (hereinafter, “LIS”), in its current wording, establishes that the requirements to opt for it are:

  1. That at all times during the tax period the company has 8 or more housing properties rented or offered for rental.
  2. That these homes are rented for a minimum of 3 years.
  3. That an individual accounting is made for each rented property.
  4. If the company carries out another complementary activity, the housing rental activity represents at least 55% of the total income or that 55% of the value of the company’s assets can generate said income with the right to relief (“bonificación”).

The application of said regime is optional and must be communicated to the Tax Authorities.


In addition, it is incompatible with the other special regimes (also with that of Reduced Dimension Entities “Entidades de Reducida Dimensión, ERD“), except those of fiscal consolidation, that international tax transparency and mergers, spin-offs, contributions of assets and exchanges of securities. 

Since the approval of Law 22/2021, of December 28th, which entered into force on January 1st, 2022, the relief of the tax payable amount “cuota íntegra that corresponds to income derived from housing rental is 40% (with respect to the previous 85 %).

This recent regulation does not change the fact that in the event of distribution of dividends coming from the rental income to which said relief is applied, the dividend exemption of article 21 LIS is used only to 50% of its amount.

It is worth analysing whether the application of said EDAV regime is more beneficial, especially for those entities that intend to transfer their profits in the form of dividends. To do so, let’s see what the net return would be if the company dedicated to housing rentals has a profit before taxes of €50,000, in the event of:

a) Distributing the dividends directly to a natural person partner with the application of the EDAV regime,

b) Distributing said dividend through an interposed company with the application of the EDAV regime, and

c) Distributing the dividend through an interposed company without application of the EDAV regime.


Dividends to NP

Dividends to LP with EDAV

Dividends to LP without EDAV

Profit Before Taxes

50.000 €

50.000 €

50.000 €

Tax payable, “Cuota íntegra

12.500 €

12.500 €

12.500 €

Relief *

5.000 € 

5.000 €

0 €

Net tax payable

7.500 €

7.500 €

12.500 €

Profit to distribute

42.500 €

42.500 €

37.500 €

Company dividends cost 5.578€ ***

468 €

Company net return

36.922 €

37.031 €

Dividend PIT (IRPF) of the Natural Person cost

8.805 € 

7.633 €

7.656 €

Net return NP Partner

33.695 €

29.289 €

29.375 €


*40% relief of the total tax payable.

** Application of the savings base rate base don article 66 of the Personal Income Tax Law. 

***On the 50% of the 42.500€. the exemption of 21 LIS is applied on the 95% (on the other 5% the tax rate of 25%); on the other 50% the tax rate of 25% is applied directly.  

Consequently, as it can be seen in the table, the EDAV regime is no longer beneficial for those companies that want to distribute the dividends to another company, since the 40% bonus does not compensate for the loss of the right to the exemption of article 21 LIS. over 50% of income. All this without taking into account due compliance with the rest of the requirements, such as a stricter accounting regime or not being able to apply the advantages of the ERD regime. The EDAV regime will only be attractive from a fiscal point of view if you want the money distributed through dividends to reach the natural person directly.


In case of questions about this or other matters, do not hesitate to contact our tax advisors in Barcelona.

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