Tax Agency and vacation rental

The Tax Agency has put vacation rentals in the spotlight in recent months. With 2018 and 2019 being so eventful in terms of legislation, it is normal for hosts of tourist apartments to be somewhat confused.You can also download it for freehere.

If you are wondering things like: Do I have to declare VAT? How do I declare my tourist flat income in the IRPF? What is the IPT? Then you should read this post.

These are some of the questions that vacation rental hosts may have about the Tax Agency and that we are going to help you answer.

It will help you to know the 2019 news regarding the taxation of tourist accommodations.

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Tax Agency and vacation rental, in summary

In the Guide to taxation of tourist dwellings, we will focus on the key points to avoid errors before the Tax Agency. You can always correct them in the future. Or you can also ask your accountant to help you. But if you do it right the first time, you will avoid compromising situations with the Tax Agency.

This guide is aimed at novice or veteran hosts who want to know more about the taxation that the Tax Agency has on vacation rentals. We will explain step by step and in simple language how tourist housing is taxed in Spain. More specifically, we will talk about the different taxes that are levied on the rental of tourist apartments.

Rental of housing for tourist use and seasonal: What are the differences according to the Tax Agency?

Seasonal rental and tourist or vacation rental property. Is it the same for the Tax Agency? Keep reading to resolve this doubt that many hosts have when defining their apartment in front of the Administration.

Unlike housing rental contracts (for permanent use), vacation rental housing (or for tourist use) is not governed by the Civil Code or the Urban Leasing Law (LAU). While in the case of seasonal housing rental, some parts of the LAU do apply. Let's break it down!

Seasonal rental property

What do we mean by seasonal rental property? We're talking about cases where the purpose of the accommodation is to meet the housing need temporarily. With a shorter duration than general rental but longer than tourist rental.

Until 2013, there was no difference between tourist rental and seasonal rental. The former were equivalent to the latter and were subject to the LAU. It's true that there were some points, such as the administrative authorization of the Autonomous Community, but in general, these leases were mainly subject to civil regulations. However, with the law on flexibilization of the housing rental market, this changed.

Let's see how the rental of housing for tourist use and seasonal differ today.

Rental of housing for tourist use

With the entry into force of L4/2013, Law on flexibilization of the housing rental market, the LAU was modified and the vacation rental housing and seasonal rental were removed from the civil scope. As of 2013, all vacation rental and seasonal rental were under the competence of the Autonomous Communities.

In fact, since the publication of the new law, the Canary Islands, Castile and León, the Basque Country and Andalusia have regulated the rental of tourist housing. In addition, Catalonia and the Community of Madrid are expected to approve new regulations soon. To delve into legal details, you can take a look at the tourist housing legislation information center.

Urban Leasing Law and vacation rental

As we explained before, until 2013 there were no differences between rental of housing for tourist use and seasonal rental. It was equivalent and both were subject to the Urban Leasing Law. That is, for the Tax Agency, these two types of vacation rental were the same. However, the 2013 law on flexibilization of the housing rental market drastically changed the landscape.

With the entry into force of Law 4/2013, Law on flexibilization of the housing rental market, the LAU was modified. In essence, tourist housing rental was removed from the purely civil sphere. As of 2013, all tourist housing rental was under the regulations of the Autonomous Communities… As long as they developed that regulation.

There are communities such as the Canary Islands or the Basque Country that already have approved legislation on the subject, while Catalonia or Madrid are now working on it.

How does the Tax Agency apply the LAU to your vacation rental?

In this sense, the rental of tourist accommodation is regulated by this specific regime –which is the one followed by the Tax Agency–. As established in article 5e) of the LAU.

The temporary transfer of use of the entire furnished and equipped property in conditions of immediate use, marketed or promoted in tourist offer channels and carried out for profit, when it is subject to a specific regime, derived from its sectoral regulations.

Article 5e) Urban Leasing Law

But what about the regulations of my autonomous community? Virtually all the Autonomous Communities have developed their regulations so you should know the one that applies to you in your region.

VAT and vacation rental

The significant growth of tourist rental housing in recent years has raised doubts about whether you, as the owner, have to declare the VAT on the expenses and income generated by your accommodation. In this post, we tell you about the relationship between VAT and vacation rental for the Tax Agency.

The VAT Law (LIVA) establishes that whoever carries out rentals of tourist accommodations has, for VAT purposes, the status of entrepreneur (art 5.one.c LIVA). As long as they are carried out by entrepreneurs “the rentals of tourist accommodations are subject to VAT” (art 4.one LIVA).

The subjection to VAT determines the non-subjection to the concept of Taxable Property Transfers of the Tax on Property Transfers (ITP), unless the exemption in VAT is applicable (art 4. four LIVA).

What a mess! So, does the vacation rental support VAT or ITP? The short answer is that it will support VAT or ITP depending on the services you offer

Services for which you have to declare VAT to the Tax Agency for your vacation rental

In general, you should declare VAT to the Tax Agency in those tourist accommodations that provide “complementary services typical of the hotel industry”. The hosting services are characterized by extending the attention to customers beyond the mere provision of a property or part of it.

That is, the hosting activity is characterized, unlike the housing rental activity, because it normally includes the provision of a series of additional services beyond the mere rental of the housing.

The services referred to in the VAT Law are restaurant, cleaning, laundry or other similar services. The General Directorate of Taxes gives several examples of these services, namely:

• Reception and permanent and continuous attention to the customer in a space destined for this purpose
• Periodic cleaning of the property and accommodation
• Periodic change of bed and bath linen
• Laundry
• Luggage storage
• Press
• Bookings
• Food and beverage services

You can consult the following links from the Ministry of Finance, where they explain which services are typical of the hotel industry, and therefore, subject to VAT: [1] and [2].

If you provide this type of service, you will not be exempt from VAT and you must charge VAT at the reduced rate of 10%, as do hotel establishments. You can take a look at the binding consultation of the Tax Agency.

Services for which you do not have to declare VAT on your tourist apartment to the AEAT

On the other hand, if they do not provide any of the services listed in the previous point but do provide any of the following, which are not considered complementary services typical of the hotel industry, you will be exempt from passing on VAT and will not have to declare it on your vacation rental invoices to the Tax Agency.

• Cleaning service for the apartment provided at the entrance and exit of the period contracted by each tenant.
• Service of changing clothes in the apartment. Provided at the entrance and exit of the period contracted by each tenant.
• Cleaning service for the common areas of the building (lobby, stairs and elevators). As well as the urbanization in which it is located (green areas, access gates, sidewalks and streets).
• Technical assistance and maintenance services. For example, plumbing, electricity, glassware, blinds, locksmithing and household appliances repairs, occasional.

If your accommodation only offers these VAT-exempt services, then you do not have to file or pay VAT. However, tenants should pay the ITP, transferred to the Autonomous Communities.

Tax on Economic Activities and tourist rental

First, we are going to explain what the IAE is and what income is taxed by this tax. Then we will go into detail on the relationship between the Tax on Economic Activities (IAE) and vacation rental for the Tax Agency.

The IAE is a “direct tax […] whose taxable event is constituted by the exercise in the national territory of business, professional or artistic activities, whether or not they are carried out in a specific location and whether or not they are specified in the tax tariffs”. For the Tax Agency, the economic activities taxed by the IAE are those that involve the use by own account of means of production and/or human resources.

In addition, RDL 1175/1990 establishes several rates - or categories of business activities - taxed at different tax rates.

Luckily individuals are exempt from this tax, so we will discuss the corresponding section for the case that you fall within an economic activity.

IAE of vacation rental with hosting services

If you offer any of the services that involve passing on VAT in your tourist accommodation, this point will be relevant to you:

The economic activity of your tourist apartment is classified in group 685 of Group 68 of the first section of the IAE. That is, it is an "Extra-hotel tourist accommodation", within those classified as "Hosting services". Basically, it is a catch-all that includes all hosting services other than hotels and motels, hostels and pensions, inns and guest houses, hotel-apartments, organized companies or agencies for the exploitation of private apartments, and tourist campsites.

In conclusion, if you offer hosting services in your tourist apartment, your economic activity is classified in group 685 of the first section of the IAE tariffs.

IAE of the tourist apartment without hosting services

In this case, you should not register with the IAE to keep your vacation rental up to date with the Tax Agency. In addition, you will declare your income along with the rest of your income once a year.

IAE of the vacation rental that you cede to a management company

In this case, we analyze when the owner of a tourist property transfers it to a person (individual or legal entity) and it is the latter who operates it as an extra-hotel establishment, contracting with tour operators, OTAs and assuming the risks of operation.

Thus, the owner of the tourist apartment develops a real estate rental activity. It is classified in heading 861.2 of the first section of the IAE. Specifically, the one of “Rental of industrial premises and other NCOP rentals”. For IRPF purposes, it will not carry out any economic activity. However, you will have to invoice your tenant for the rent of the property with 21%. In addition, depending on the case, include or not withholdings

In conclusion

Similarly to the case of VAT, the IAE and the taxation of tourist rental housing for the AEAT depends on the type of services offered:

• You offer hosting services. Then your activity is classified as "Extra-hotel tourist accommodation".
• You do not offer hosting services. Then your activity is that of “Housing Rental”. If you have a person hired full-time, otherwise you will not register for IAE.
• You rent the tourist apartment to a third-party company –which operates it as tourist accommodation–. Then your activity is that of “Rental of industrial premises and other rentals

IRPF and vacation rental

Your vacation rental, up to date with the Tax Agency

Download for free the tax guide for tourist accommodations and become a professional host. More than 30 pages with the keys to the taxes on your accommodation (IAE, IRPF, IVA, etc.).

Download free guide

And May arrives: spring, allergies, warm weather… and the income tax return! If you have started your tourist accommodation, then you will have to declare it in your Personal Income Tax return. What does it depend on how it is taxed? Guess, on the services you have provided ;-).

Declaring income from tourist apartments without accommodation services in the Personal Income Tax

If your tourist accommodation does not offer hosting services, the income derived from renting the tourist apartment is considered income from real estate capital. For example, cleaning services performed before the arrival or after the departure of tenants or the delivery and collection of keys at the time of entry and exit of clients are not considered hosting services.

In general, if you are the owner of the tourist apartment, you, as the property owner, will have to declare the difference between the total income and deductible expenses of your vacation rental to the Tax Agency in the IRPF declaration.

You cannot apply the 60% reduction that applies to the rental of habitual residence to this result –since it is a tourist apartment, and therefore covers a need –housing– of a temporary nature.

The periods in which the tourist apartment has not been rented generate the imputation of real estate income, just like any other dwelling. In this case, the amount will be the result of applying the imputation percentage corresponding to the cadastral value of the property. In addition, you will have to weigh it according to the number of days it has not been ceded for tourist purposes.

IRPF and vacation rental with hosting services

If in your tourist apartment you offer accommodation services to your guests - periodic cleaning or change of clothes, catering or leisure. Then, the Tax Agency will consider the income from your vacation rental as income from economic activities in your Personal Income Tax return.

Information obligations

Since 2018, a new obligation to provide information on tourist housing has been established. To do this, the platform you use (Airbnb, Booking, etc.) must submit model 179.

The presentation of model 179 - information obligations - is mandatory for the 2018 income tax return, to be submitted in 2019. Submitting it does not exempt you from declaring the rest of the income from your tourist accommodation (IRPF, non-residents, ITP, etc.).

The intermediaries of vacation rentals will inform the Tax Agency of each of the transfers of property for tourist purposes located in Spanish territory. This is known as information obligations. Transfers of tourist housing and seasonal rental are included.

The information to be provided in the new model 179 includes:

• Property owner
• Holder of the right by virtue of which the dwelling is ceded (if different from the holder of the dwelling)
• Identification of the persons or entities assignees.
• Property subject to assignment.
• Number of days of enjoyment of the housing for tourist purposes
• Amount received by the transferor of the right
• Contract number assigned by the intermediary
• Start date of the assignment
• Intermediation date
• Identification of the means of payment used

You can take a look at an example of Model 179 of information obligations here [PDF].

Model 179

Many doubts arise regarding the Quarterly informative declaration of the transfer of use of dwellings for tourist purposes, regarding this both the Tax Agency and the DGT in its Binding Consultation V3083-18 have clarified who is required to submit the model 179.

The most noteworthy aspects of both pronouncements are as follows:

Your vacation rental, up to date with the Tax Agency

Download for free the tax guide for tourist accommodations and become a professional host. More than 30 pages with the keys to the taxes on your accommodation (IAE, IRPF, IVA, etc.).

Download free guide

Who should submit model 179?

Persons and entities that intermediate between the assignors and assignees of the use of dwellings for tourist purposes are required to submit model 179 in accordance with the terms established in sections 2 and 3 of article 54.ter of the General Regulations on tax management and inspection procedures and the development of common procedures for the application of taxes, approved by Royal Decree 1065/2007, of July 27.

Intermediaries for the purpose of submitting model 179 are individuals and entities that provide the intermediation service between those who cede and those who take the use of dwellings for tourist purposes, whether on a paid or free basis.

In particular, those persons or entities that are constituted as collaborative platforms that intermediate in the transfer of use and have the consideration of information society service providers, regardless of whether or not they provide the underlying service that is the object of intermediation or the imposition of conditions regarding the transferors or transferees of the service in relation to it, such as price, insurance, deadlines or other contractual conditions.

Therefore, they are considered intermediaries for these purposes, not only digital intermediaries (especially collaborative platforms), but also any other (analog or traditional intermediaries) whose activity in the operation has consisted in the effective confluence between supply and demand for the transfer of said housing.

Who are considered intermediaries?

Regarding the previous point, the STS of October 21, 2000 (Rec. 3023/1995) states that:

In the mediation contract or brokerage, the mediator must limit himself in principle to putting the future buyer and seller in relation to a specific object, but in any case, the activity must be carried out to achieve the fulfillment of the final contract, and this is understood by modern doctrine insofar as it states that the legal relationship between the client and the mediator does not arise exclusively from a contractual mediation business, since the obligations and rights also require the fact that the intermediary has effectively contributed to the parties concluding the business ( Judgment of October 2, 1999; and this Chamber has repeatedly declared that said contract is subject, as regards the accrual of fees, to the suspensive condition of the celebration of the intended contract, except in cases of express agreement judgments of October 19 and November 30, 199, March 7, 1994, July 17, 1995, February 5, 199 and April 30, 1998

In addition, it states that «mediation is consummated when the contract to which it tends is granted or perfected by the concurrence of the offer and acceptance, or in terms of the STS of 20-5-2004, the right to receive the commission arises when unequivocal acts of mediation crystallize in the operation in which the agent intervened».

Therefore, only those who receive their remuneration based on the conclusion of the contract in which they mediate can be considered as 'intermediaries'.

In accordance with the jurisprudence of the Supreme Court in relation to the real estate mediation contract, the intermediary who receives a remuneration or commission for achieving a result will be subject to this information obligation, in this case, the effective contracting between the assignor and the assignee for the temporary transfer of use of all or part of a dwelling for tourist purposes.

Platforms, hosts and model 179

Those collaborative web platforms that carry out only a mere digital hosting of housing for tourist use will not be required to submit the informative declaration (model 179) of vacation rentals to the Tax Agency.

In the case of a owner who rents his housing to a property manager (“Property manager”) for a fixed monthly amount and, subsequently, this property manager, based on the sublease right derived from the contract concluded with the owner, subleases it for tourist purposes by its own means, neither of the two has to present model 179.

In this case, the Property Manager as the holder of a sublease, assigns to a third party, the assignee, the temporary use of the whole or part of the furnished and equipped housing in conditions of immediate use, becoming ultimately the assignor of the use of housing for tourist purposes, so that it cannot be considered an intermediary for these purposes.

If the real estate manager uses an online platform that receives remuneration or commission for the effective formalization of the transfer of use of dwellings for tourist purposes between the Manager, who acts as assignor, and the tourist assignees of the dwelling, without having any right of use or enjoyment over the dwelling transferred for tourist purposes, but only provides an intermediation service necessary to conclude the celebration of the transfer contract between the Manager and the assignee, receiving remuneration or commission for it, said online platform provides an intermediation service in the transfer of use of dwellings for tourist purposes, being obliged to present the informative declaration (model 179) in accordance with Article 54 of the RGAT.

Unless a better opinion.