14 min read
by Jaime Garín, Barcelona Market Manager
Published May 03, 2023
| PROPERTY MANAGER | SHORT-TERM RENTAL | PARTNERS | SPAIN |
Once your tourist accommodation is registered (either Apartamento Turístico or Vivienda de Uso Turístico), in this second part, we will discuss how to declare the income you have generated and the tax obligations that you will have to face.
As in the first part of the series, you will have to classify your accommodation with a new differentiation to know how to declare your income and which taxes to pay. This distinction is based on the services you offer. Next, we will explain the two differences that exist.
Tourist accommodation with hosting services or those of the hotel industry
Tourist accommodations with hosting services or those belonging to the hotel industry are those that provide:
Tourist accommodations that do not offer hosting services or those of the hotel industry
Tourist accommodations without hosting services are those whose services are not considered lodging or typical of the hotel industry. Some examples:
Once you are clear about which of these two categories your accommodation is at, you must take into account what you have to do concerning the following taxes: IAE, VAT and IRPF or IS (depending on whether you carry out the economic activity as a single or legal person/company).
IAE (Impuesto sobre Actividades Económicas) - IAE (Tax on Economic Activities)
It is the tax levied on any economic activity that takes place in Spain. Whether you are a natural or legal person (company) you will have to be registered with the IAE and present the declaration annually.
In both cases, you will be exempt from paying the IAE if your turnover is less than one million euros (€1,000,000). You will only have to pay IAE if you exceed this figure. Since it is not common, we won't go into more detail on this.
Therefore, the purpose of the IAE is not taxation but to ensure that you are registered and comply with the corresponding census obligations.
IVA (Impuesto sobre el Valor Añadido) - VAT (Value Added Tax)
IVA is an indirect tax that taxes the final consumption of products and services. It is declared quarterly.
IRPF (Impuesto sobre la Renta de las Personas Físicas) - Personal Income Tax (Personal Income Tax)
The most common scenario for most, when you start in the tourist rental business, is that you are an only person. That is, you have not created a company (legal entity). In this case, you must file the Declaración de la Renta or IRPF (Income Tax Declaration), a progressive tax levied on the income of people residing in Spain. It must be declared annually, although if you are self-employed, you usually have to submit it quarterly with Form 130.
It is the most common among tourist accommodations, so we will delve deeper into this tax and its deductible expenses.
The IRPF distinguishes two types of income based on the services offered:
If your accommodation offers hosting services, the IRPF will consider your income as Rendimientos de las Actividades Económicas (Income from Economic Activities). In this case, when you make your income statement, you must place your earnings in the income from the economic activities section.
There will be a lot of deductible expenses that you can deduct, with the idea that the IRPF you have to pay is less. In theory, all those expenses related to the provision of your economic activity will be deductible, although on some occasions it will not be as easy to justify them as in the case of the companies in the IS - Impuesto de Sociedades (Corporation Tax).
On the other hand, if your accommodation does not offer hosting services, your income will be considered Rendimientos de Capital Inmobiliario (Real Estate Capital Income).
In this second scenario, when making the declaration, you must detail them in the real estate capital income section.
In this case, the deductible expenses will be slightly less. When sharing periods in which your property is not rented for tourism, you must justify that said expenses occurred while it was used for tourism. There will be some easily attributable ones that will only happen when you host your guests. But there will be many other global expenses, such as the building community expenses, the garbage rate, amortisation, electricity, etc., that will happen both when the property is occupied, and when it is empty. For these, you must make an apportionment for the period in which they were caused as a consequence of the tourist activity.
Besides, you will not be able to use the 60% deduction applied alquileres de viviendas de uso habitual (habitually used housing rentals) since, in this case, your accommodation does not offer permanent accommodation but temporary (tourist) accommodation.
Another aspect to remember is that you must also pay what is known as Imputación de Renta Inmobiliaria (Real Estate Income Imputation) for the time your property has not been rented for tourism, as it is the case with any other property outside of tourist activity.
Below we name some examples of the most common deductible expenses in the IRPF tax in both returns and we classify them as apportionable or not to give you an idea:
Another detail that you should keep in mind is that there will be a limit on deductible expenses. At most, its total sum may not exceed the amount of the income obtained in the year that we declared. If they exceed it you can deduct the rest over the next four years.
IS (Impuesto de Sociedades) - IS (Corporate Tax)
If, on the contrary, you have created a company or legal person for your tourist rental business, you must declare the IS - Impuesto de Sociedades (Corporation Tax). This tax taxes the benefits obtained by companies and other entities with a legal personality whose residence is in Spain.
This scenario may occur when you manage the Tourist Apartment (AT) typology, and it has compensated you more to create a company than to work as a freelancer or single person. You must declare it annually.
There will also be deductible expenses for the IS. We won't delve further as it is not such a common case when starting tourist rentals. However, remember that all those that comply with the rule of "that has to do with the development of the activity" will be deductible expenses. And as we mentioned previously in the IS it will be easier for you to justify them than for a single person with hosting services in the IRPF.
Model 179 is a quarterly informative statement that affects the assignment of tourist homes. Although we see that it is within the models of the Income Statement, it does not entail the payment of any tax and its objective is to inform the Treasury of tourist homes located in Spain.
In addition, in most cases, you will not be legally obliged to present Form 179 to the Treasury. Those who are legally obliged to do so will be the OTAs and travel agencies that act as intermediaries. Only on a few occasions in the future when you start to manage other people's accommodation and generate direct bookings for them, you might have to start considering introducing it.
Regardless of the obligation, if you wish, you can submit it voluntarily to offer greater clarity to the Treasury, avoiding possible revisions in the future. In addition, there may be discrepancies between the performance that the OTAs present to the reservations that your ads generated and those that you declare. Therefore, sometimes depending on your case, it may be advisable that you consider presenting it.
Management software for vacation rentals, such as AvaiBook by Idealista, allows you to generate your Model 179 with a single click. If you want to know more about the keys to Model 179, watch a webinar organised by Avaibook here, where they delve into this matter with Álvaro Graciani, an Economist and Lawyer specialising in Tourist Accommodation.
Although we know that the tax process can be hard to understand and carry out and that each specific case has its peculiarities, we hope we have given you a first overview of the tax situation of the tourist rental market in Spain.
In any case, as we already did at the time in the first part of the series when we talked about registering your accommodation, we believe that it is best that you go to a professional who offers you comprehensive advice on tax, legal and accounting matters and who accompany you in your first years of business.
In our case, we recommend one of the most specialised law firms and advisors in consulting for tourist accommodation in Spain: Graciani Asesores y Abogados. You can request a consultation on their website here.