The tourist rental of real estate can be a very profitable activity and, in order to avoid any problems with the tax authorities, it is important to ensure that all the taxes that must be paid in these cases are filed in due time and form.
In these cases, the owner of the property must declare the income received in his income tax return, and there are even certain accounting and invoicing obligations that must be kept up to date.
What is considered to be a tourist rental
There is no national law that defines what a tourist rental is; it is necessary to refer to the regulations of the different autonomous communities. As a general rule, a property is considered to be for tourist use if it is rented temporarily for more than three months a year and it is promoted or marketed through the usual channels of the tourist offer.
What taxes are payable on the tourist rental of real estate?
Personal Income Tax (IRPF)
If the property is only rented out without providing any other type of service, the income obtained from this activity is considered income from real estate capital and must be taxed as such for personal income tax purposes.
It is calculated by deducting deductible expenses from the full income.
However, the 60 % reduction cannot be applied to the positive net income obtained because the rental is not intended for the tenant’s permanent residence.
Value-added tax (VAT)
VAT is required when the lessor is a business or professional person. If the tourist rental is without accommodation services, no VAT is due or payable. However, if the rental includes accommodation services such as cleaning, laundry or other similar services, then an invoice with 10% VAT must be issued.
Tax on economic activities (IAE)
If the tourist rental activity is carried out professionally, the owner of the property must register with the IAE, but this tax is only payable if the turnover exceeds one million euros per year, although there is an exemption from this tax for the first two years of activity.
Non-resident income tax (IRNR)
It is only applicable if the owner of the property intended for tourist rental is not resident in Spain. It is settled using Form 210 every quarter.
Other municipal taxes and charges
In addition to the above, it should be borne in mind that some autonomous communities and municipalities have established special taxes such as the tourist tax, which is also applied in the case of tourist flats, and which is payable by the guests.
Tax obligations for owners and lessors of tourist properties
Declaration of income in the income tax return
If the rental of a property for tourist purposes is done on an occasional basis, the earnings will be taxed as income from real estate capital under the conditions we have seen above.
On the other hand, if this activity is carried out professionally, then this income will be taxed as income derived from economic activity.
Registration in the Register of Tourism Enterprises
Tourist rental is becoming increasingly regulated. In order to be able to carry out this activity legally, those who have one or more dwellings that they intend to rent out to tourists must make the corresponding registration in the Register of Tourist Companies of their autonomous community. They will then obtain an identification number that must appear in their advertisements.
Settlement and payment of taxes
Tourist rental is a business activity like any other and, consequently, taxes must be paid and settled for it.
The corresponding invoice must be issued to the clients, with the corresponding taxes and fees that apply according to the case, and then they must be paid to the tax authorities.
Invoicing and accounting obligations
When a tourist rental is carried out on a professional basis, the person who carries it out assumes the same obligations as any entrepreneur. Consequently, he/she has to keep books that record his/her invoicing and accounting.
Special cases: rentals through digital platforms
Notably, in this case, the owner of the property has to pay a commission for the service provided by the digital platform. This service is subject to a VAT of 21%, which for the lessor will be considered a deductible expense when calculating the net rental income.
Carrying out the activity of tourist property rental is a lucrative and very current business, but when it comes to carrying it out, it is necessary to abide by the legislation, which we have already seen can be different in each autonomous community.
In addition, it is necessary to ensure that the corresponding taxes are declared correctly in each specific case. In this way, this economic activity can become a livelihood for those who carry it out or an interesting way of obtaining extra income.
If you have any questions on this subject, please contact our tax advisors in Barcelona.
