Raymundo Larraín NesbittLawyer Raymundo Larraín Nesbitt explains the changes in landlord rental allowances (tax relief) in Spain spurred by the key ruling of the European Court of Justice (ECJ) from last 3rd of September 2014 (Case C-127/12), as well as the new holiday rental laws in Spain.
By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of March 2015
Introduction
I am going to split my article in two parts.
The first part deals with the batch of regional holiday rental laws that have swept the land becoming an ubiquitous requirement. Any landlord wishing to rent privately their Spanish property for a period exceeding one month in a year falls under the remit of this new regulation.
The second part deals with the changes in taxation related to rental laws brought about by European Legislation; specifically regarding applicable rental reliefs, at both state and regional level (Autonomous Communities).
I. Holiday Rental Laws
Definition
Over the past two years almost every Autonomous Community in Spain has zealously ruled on what is known as ‘viviendas de uso turístico‘ or private holiday rentals. These are laws which seek to regulate short-term touristic lets from private individuals and bring them in line with minimum (hotel) lodging standards. The laws in all Autonomous Communities are fairly similar so a couple of common denominators can be extrapolated. A touristic let is generally defined by two elements:
• A dwelling that is offered on a short-term rent to tourists employing the media (internet, newspapers, magazines, travel agencies etc.). There is great diversity in the offered lodging and may range from a letting a whole detached villa in a luxurious seaside resort to renting a single room in a Bed & Breakfast. Some communities expressly bar the possibility of renting a single room.
• The property is let out one or more times a year for a period that normally exceeds one month i.e. summer lets or winter lets in ski resorts. But they can also be rented for days, weeks or months.
Excluded Properties
In general, properties that meet the following criteria would be excluded from this regulation and would fall under Spain’s Tenancy Act (Ley 29/1994, de Arrendamientos Urbanos).
• Property that is lent to friends/family without any compensation (monetary or otherwise).
• Property that is let to the same person/s for a period that exceeds three months in a year.
• Rural property which falls under its own regulation.
• Landlords who own three or more properties in the same development or ‘urbanización’ fall under a different regulation: ‘apartamentos turísticos’ (not to be confused with ‘viviendas de uso turístico’ which is the topic of this article).
• No more than fifteen people can live in the same property.
Requirements
Touristic lets are generally obliged to meet the following criteria which by no means is a closed list (I only highlight the main ones). For an accurate list you should check the touristic rental law of the Autonomous Community where your property is located. Please read further below a region-by-region list of approved holiday rental laws.
EDIT October 2016: For the avoidance of doubt, as some people are reportedly getting confused, what follows is a generalisation. I have taken the draft holiday rental law of Andalusia as template to extrapolate generalities or common denominators to be expected from all regions, as regional holiday rental laws in Spain are in fact fairly similar with small variations. Touristic lets are generally obliged to meet certain criteria, though it varies by region, I list the main ones for Andalucia below. If, for example, you are interested in Murcia region, please check the local regional requirements of Murcia´s holiday rental law for the minutiae (I do not list them below!).
• The property must have attained what is known as a Licence of First Occupation (also known as First Occupancy Licence, Habitation Certificate, Habitation Licence, Licencia de Primera Ocupación, Cédula de Primera Habitabilidad, Cédula de Habitabilidad or Cédula de Ocupación).
• Full compliance with planning, health and safety, security and disabled access amongst other laws; both at a national and regional level.
• Rooms must be ventilated and have blinds or shutters.
• Free internet service available in every room.
• Air conditioning unit in every room (as a fixed fixture, not a portable device).
• When properties are let during the winter season (October through to April) a heater must be made available in every room that is let (as a fixed fixture, not a portable device).
• First aid kit and fire extinguisher.
• Cleaning service at the start of new lodgings.
• Rooms must have adequate furniture.
• Complaints book.
• Touristic guides, maps of the surroundings (books).
Non-Compliance
My advice is that landlords would do well to seek tailored legal advice and determine if their property complies fully with all laws. Failure to comply may lead to stiff fines. Fines range from hundreds to over a dozen thousand pounds.
E.g. landlord has not applied for a touristic letting licence from his town hall or the property is unregistered at the special register for touristic properties.
E.g. landlord is reported because he does not have a ramp built for disabled access.
E.g. landlord does not have a wi-fi connection set up.
E.g. landlord has not attained a Licence of First Occupation from local planning authorities.
My Take on Touristic Rental Laws
I had already written an admonitory article back in 2013 (New Measures to Bolster Spain’s Ailing Rental Market) on the worrisome trend the Autonomous Communities were following on enacting their own laws to regulate touristic lettings on the wake of Law 4/2013 which (clumsily) left the door ajar to them.
I feel compelled to excoriate these touristic rental laws which are a bad idea as in the best of cases they impose a new set of obligations (and associated expenses) on landlords which severely impact their rental income and at worst require a rental licence is attained under threat of hefty fines on non-compliance. In some cases individuals will not be even allowed to rent as these laws (artificially) stifle competition. At no time should public administrations limit the rights and usage of private homeowners to rent out their properties. It is a direct attack on private property which in my eyes is a red line that should not be crossed.
This unnecessary batch of new regional laws only make the prospect of renting for small-time landlords – which are legion – all the more difficult (acting almost as a deterrent) whilst at the same time make life easier on large powerful hotel groups as competition is removed. In other words, these regional laws thwart competition in a free market economy benefiting large corporations at the expense of the little people who make a meagre supplementary income by letting property out. The field is uneven.
Two years on, the majority of the seventeen Autonomous Communities which make Spain have jumped on the band wagon passing legislation on touristic lets. Landlords would do well to seek legal advice on whether their property complies fully with the new spate of regional regulation. Some of these laws (i.e. Balears) require that local authorities issue a ‘rental licence’ before you are allowed to let and impose hefty fines on non-compliance. The obligations are (formally) geared to set a homogenous minimum standard to rent property and in some cases require a substantial upfront investment which may negate altogether the very idea of letting as the numbers may not stack up in every case.
If you examine the new requirements landlords are expected to meet they resemble closely those we have come to expect from the hotel industry (i.e. free wi-fi, A/C units, professional cleaning service etc.). It stands to reason you cannot possibly demand from private individuals the same blue-ribbon lodging standards and services as those offered by financially powerful multinational hotel groups. It’s daft.
Private individuals in many cases will not have the financial means to acquire all the ‘minimum’ gadgets, let alone face the grim prospect of being fined dozens of thousands of pounds on non-compliance. If these regional laws are enforced harshly by authorities it will leave the burgeoning business of private home rentals to affluent people or groups; the only ones with the means to keep up with the frantic pace set out by regional authorities. Borrowing a quote from Thomas Jefferson — “There is nothing more unequal than the equal treatment of unequal people”.
Again the cynic in me asks cui bono? Who stands to gain more from such changes in home rental regulation? Definitely not landlords (or tenants for that matter). The powerful hotel industry does. Property has been let to tourists for decades without major hindrances (in fact Spain’s whole unbalanced and undiversified economy hinges on tourism and construction; they account for well over 20% of its GDP). Adding red tape is unnecessary and redundant.
Why now? Because after a huge property boom that lasted almost a decade the properties now on offer have trebled whilst demand remains stable. This has in turn dramatically increased competition for hotel groups which has severely dented their bottom line (and miffed their shareholders). They have relentlessly lobbied over the last years to curtail what they deem as ‘unfair competition’.
Competition is always good for the broad economy as it drives prices down and improves services not to mention job creation at a time when the economic recovery remains anemic (in Spain). Competition at its heart is what keeps people and companies on their toes. Remove competition and companies become complacent, services deteriorate and prices soar. In a competitive market bad companies are weeded out by consumers through natural selection. More so in the days of internet with professional bloggers that take delight on rating hotel accommodations for the benefit of all us punters. This is not about accommodating lofty ideals, it’s about being pragmatic in today’s tough world. A healthy robust economy demands competition to flourish and create jobs, period. Remember my words next time you have to pay for a pricey (hotel) lodging in Barcelona or Madrid.
You can find an insightful article from American journalist Kevin Brass (New York Times, Wall Street Journal) with poignant comments on the matter of (Spanish) administrations encroaching on private short-term lettings (for the benefit of the hotel lobby) from the 8th October 2014: Opinion: Attacks on Short-Term Rentals Are All Hype.
EDIT 9th of April 2015: Spain’s Competition and Market’s Authority (CNMC) has taken legal action against Madrid’s Holiday Rental Law on grounds of “anti-competitive practices that restrict consumer’s ability to choose (a service)”. More on this: Five-Day Holiday Rental Limit Challenged in Madrid.
Region-by-region List of Approved Holiday Rental Laws
Moving on from my rant, I have compiled a comprehensive list of the Autonomous Communities in Spain with approved touristic rental laws at the time of this article’s printing. The most high-profile absentee is Andalusia’s draft law which has sparked hot controversy. Regardless, I have included below a link to its draft bill out of interest to anyone.
EDIT 03/02/16: the autonomous region of Andalusia approved its Holiday Rental Law in February 2016. More on this matter in my article: Andalusia’s Holiday Rental Decree.
Holiday rental laws are here to stay. It is a landlord’s duty to acquaint himself and comply with the regulation of his own Autonomous Community. Some aspects of the below-listed regulations vary widely so it is highly advised professional advice is sought beforehand to be on the right side of the law. In some instances, such as Balears, holiday rental licences are fairly restrictive and hard to attain.
• Andalusia: Approved. Andalusia’s Holiday Rental Law explained in English. The new approved law: Decreto 28/2016, de 2 de febrero, de las viviendas con fines turísticos. Fines for non-compliance range between €2,000 to €150,000. Another important law which currently applies is Law 13/2011 of Tourism in Andalusia.
• Aragón: Decreto 167/2013, de 22 de octubre, del Gobierno de Aragón, por el que se aprueba el Reglamento de los apartamentos turísticos en Aragón
• Asturias: Updated regulation pending. Decreto 60/1986, de 30 de abril, sobre ordenación de los apartamentos turísticos and Decreto 34/2003, de 30 de abril, de viviendas vacacionales.
• Balears: More information in my updated article (September 2017): New Balearics Holiday Rental Law. Require a holiday rental licence for villas and townhouses; apartments are excluded. Law 8/2012 on Tourism. Decreto Ley 6/2013, de 29 de noviembre, por el que se modifica el artículo 52 de la Ley 8/2012, de 19 de julio, del Turismo de las Illes Balears.
• Basque Country: Decreto 198/2013, de 16 de abril, por el que se regulan los apartamentos turísticos
• Canary Islands: Fairly restrictive. Decreto 142/2010, de 4 de octubre, por el que se aprueba el Reglamento de la Actividad Turística de Alojamiento and the new Reglamento de las viviendas vacacionales de la Comunidad Autónoma de Canarias. Read this post on the new holiday rental law for the Canary Islands.
• Cantabria: Decreto 19/2014, de 13 de marzo, por el que se modifica el Decreto 82/2010, de 25 de noviembre, por el que se regulan los establecimiento de alojamiento turístico extrahotelero en el ámbito de la Comunidad Autónoma de Cantabria
• Castilla-La Mancha: Unapproved.
• Castilla y León: Unapproved, only for rural tourism Decreto 75/2013, de 28 de noviembre, por el que se regulan los establecimientos de alojamiento de turismo rural en la Comunidad de Castilla y León
• Catalonia: Barcelona city is restrictive with new permits. Decreto 159/2012, de 20 de noviembre, de establecimientos de alojamiento turístico y de viviendas de uso turístico
• Extremadura: Unapproved / updated regulation pending. Decreto 182/2012, de 7 de septiembre, de ordenación y clasificación de apartamentos turísticos en Extremadura
• Galicia: For detached homes only; room rentals are banned Decreto 52/2011, de 24 de marzo, por el que se establece la ordenación de apartamentos y viviendas turísticas
• La Rioja: Unapproved.
• Madrid: Stays of less than five days and single room rentals are banned Decreto 79/2014, de 10 de julio, por el que se regulan los apartamentos turísticos y las viviendas de uso turístico de la Comunidad de Madrid
• Murcia: Updated regulation pending. Existing regulation is from 2005. Decreto 75/2005, de 24 de junio, por el que se regulan los apartamentos turísticos y alojamientos vacacionales
• Navarre: Updated regulation pending. Decreto Foral 230/2011, de 26 de octubre, por el que se aprueba el Reglamento de Ordenación de los Apartamentos Turísticos en la Comunidad Foral de Navarra
• Valencian Community: Decreto 92/2009, de 3 de julio. Reglamento de Alojamientos Turísticos y empresas gestoras de la Comunitat Valenciana.
II. Changes in Taxation Brought About by European Legislation
Landlord Rental Reliefs
Following up on last month’s article regarding the ECJ’s landmark ruling of last 3rd of September 2014, which put an end to discrimination between residents and non-residents on taxation matters, these changes also affect rental laws.
Law 26/2014 of the 27th of November amends both the Personal Income Tax Act (I.R.P.F.) and the Non-Resident Income Tax Act (I.R.N.R.). These changes came into force on the 1st of January 2015. I had already referred to these changes in December’s and February’s articles: Taxes on Selling Spanish Property and Changes To Spain’s Inheritance And Gift Tax Law.
Law 26/2014 adapts and transposes the decision taken by the ECJ amending internal Spanish national laws. It brings to an end (fiscal) discrimination between residents and non-residents in a wide array of matters; for this article’s sake specifically on rental matters. EU-residents are now treated on par with Spanish residents on taxation matters relating to allowances and deductions. This translates into paying fewer taxes (as non-residents now qualify for deductions and tax allowances which were previously barred to them as these were earmarked for Spanish residents alone).
For the purpose of this article, when I make reference to ‘non-tax residents’ I will always be referring to citizens which are either tax resident in another Member State of the European Union or else in the European Economic Area (E.E.A.). Just to clarify, the below-listed changes do not benefit tax residents outside of the EU or EEA.
Rental Allowances – Situation Prior to the ECJs’ Ruling
Non-resident rental allowances were virtually non-existent prior to this ruling for private individuals. There were few instances in which you could offset rental taxes as they required you employed someone full time and had a permanent establishment in Spain. Obviously of little practicality which was not an option for the vast majority of non-resident landlords.
Post-ECJs’ Ruling – Changes to Spain’s Rental Laws
The ECJ’s key ruling of 3rd of September 2014 marks the inflection point which puts an end to (fiscal) discrimination between residents and non-residents. It forces Spain to amend its internal laws and accommodate the European principles on which the EU is grounded on. The significance of the ECJ’s ruling is that it has opened up the opportunity for non-residents to apply as from the 1st of January 2015 to the below-listed state tax allowances and deductions which were previously reserved only to Spanish residents. In addition, non-residents may also benefit from those set by the Autonomous Communities where the property is located which have a penchant of being more generous than state law.
When taxpayers are resident in another European Union Member State, or in the E.E.A., the expenses described in the Law on Personal Income Tax (IRPF) can be deducted when calculating the taxable base, provided that proof is supplied that these expenses are directly related to income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain. When expenses are deducted, a certificate of tax residency in the corresponding State issued by the tax authorities of that State must accompany the tax return.
Landlord’s State Reliefs and Deductions for Private Home Rental
The following state deductions and allowances can be offset or deducted mitigating the tax bill without prejudice of additional compatible allowances set out by the Autonomous Community contingent on where the property is located. Please take legal advice on the latter for your particular case as for economy of space I will not be listing them below.
The above translates into higher returns for a landlord. Meaning non-resident landlords stand to profit from higher net yields on letting in Spain as from 2015.
Article 24.6 of the Non-Resident Income Tax Act (I.R.N.R.) makes a direct renvoi on these to art. 23 of the Personal Income Tax Act (I.R.P.F.).
1.- Physical Persons
A. Rental Tax Relief / Deductible Expenses (Art. 23 I.R.P.F.)
Proof must be supplied that the following expenses are directly related to income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain.
• Interests arising from a loan to buy the property (i.e. mortgage).
• Local taxes and administrative charges and surcharges that impact on the rental income or else on the property itself (i.e. IBI tax, rubbish collection tax).
• Expenses arising from formalising rental contracts such as lets or sublets (i.e. Notary and/or Land Registry fees); legal defence (i.e. hiring a lawyer for tenant eviction purposes).
• Maintenance costs may be offset; refurbishment expenses are excluded.
Examples of maintenance costs (deductible): repainting over flaky paint, plumbing, debugging, tennis court green mold cleaning, swimming pool pump replacement, annual lift maintenance, leaking faucet.
Examples of refurbishment expenses (non-deductible): glass curtains, double-glazed windows, parquet, marble floor, extension to property (outbuilding), tennis court, swimming pool, private lift.
Notwithstanding the above, refurbishment expenses may be claimed on selling the property by offsetting them against your Capital Gains Tax liability. Please read my article: Taxes on Selling Spanish Property.
• Home insurance premiums (theft, fire, civil liability etc.). Please read my articles Home Insurance in Spain, Community of Owners’ Insurance Policies and How to Cancel your Home Insurance Policy in Spain. However claims arising from events that diminish the value of a dwelling are non-deductible i.e. fire
• Utility invoices (electricity, water, gas and landline).
• Concierge, gardening & security services (i.e. gated communities).
• Home depreciation and amortization. The calculation is 3% on the highest value of the following two: home buying costs or cadastral value; the value of the land is excluded.
B. Allowances
• The 100% tax allowance on letting to under thirty-year-olds is supressed as from the 1st of January 2015. The allowance is now 60% on the net income regardless of a tenant’s age.
2.- Legal Persons
Those set out by the Company’s Income Act (Law 27/2014, of 27th of November).
Changes to Spain’s Rental Laws – Conclusion
Any change that implies paying fewer taxes is always welcome. The less Administrations meddle in private affairs and businesses, all the better.
If you own property in Spain and plan to rent it out for a period exceeding one month in a year I strongly recommend you seek legal advice to comply with the obligations set forth by your Autonomous Community.
“Freedom is the right to question and change the established way of doing things” – Ronald Reagan.
American 40th US President (1981 – 1989). He steadfastly contributed to the Cold War victory which led to the fall of the Berlin Wall and the collapse of the U.S.S.R.
Larraín Nesbitt Lawyers, small on fees, big on service.
Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.
Legal services Larraín Nesbitt Lawyers can offer you
- Registration of Holiday Rental Homes
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- Holiday Homes Accounting Service (HRAS)
- Fiscal Representation
Related articles
- Renting in Spain: Top Ten Mistakes – 8th of June 2011
- Let-to-Buy in Spain: The Smart Choice – 8th of April 2012
- Letting in Spain: The Safe Way – 10th of October 2012
- New Measures to Bolster Spain’s Ailing Rental Market – 8th of July 2013
- Tenant Eviction in Spain – 8th of June 2014
- Holiday Rental Laws in Spain – 8th of March 2015
- House Hunting in Spain – The New York Times. June 2015
- Resurgent Spain: Málaga Sees Strong Sales – Mansion Global (The Wall Street Journal). December 2015
- Non-Resident Taxes in Spain – 8th December 2015
- Holiday Rental Laws in Andalusia (Decree 28/2016) – 8th of February 2016
- Decree 20/2002: Andalusia’s Holiday Rural Rental Decree – 8th of April 2016
- Urban Rental Law in Spain – Spain’s Tenancy Act – 8th May 2016
- Renting in Spain – Landlord´s Taxation Guide – 8th January 2017
- Renting in Spain: Non-Resident Landlord´s Tax Relief – 13th January 2017
- Holiday Rentals in Andalusia Made Easy – 3rd July 2017
- Holiday Home Taxation in Spain – 8th of July 2017
- Holiday-home lettings: Do NOT register with Andalusia’s Tourism Registry unless you are fully compliant – 21st of July 2017
- New Balearics Holiday Rental Law – 8th of September 2017
Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No delusional politician was harmed on writing this article. VOV.
2.015 © Raymundo Larraín Nesbitt. All rights reserved.
Mar says:
Thanks for the article.
Will the Non resident imputed income tax be removed for EU residents in the new law? (As it does not apply to residents in Spain on their second house or will it require a new ECJ ruling)
Regarding the tax rate for IRNR, will the tax rate be the same between EU residents and residents in Spain?
Linda French says:
Thank you so much for sharing this article. It is very interesting indeed. I agree with the points/views you make. I do not understand why the Spanish government cannot see that their economy is already not great, and enacting such laws is not going to help this case. It is not so attractive for investment into the country by way of persons wishing to buy and let out their properties short-term.
Raymundo Larraín Nesbitt says:
You are welcome Linda.
K Binali says:
Not sure if this is related but I was seeking some help or information on my rights regarding a rental contract I am currently engaged in. The issues I have are the following;
1- there has been no running water to the complex apartments since January 2016 as the community has nor paid the pending water rates thus resulting in the water board cutting off the water. As a result I’m now finding out the my landlord whom ironically the architect for the complex had full knowledge of the for coming result but has done nothing to really resolve the issue. It seem a string of promises to fix the problem but since cut off in January we are now almost in April and still no water, can’t wash clean use toilet etc. My question is what are the Spanish regulations on the issue as he want to pay rent on the months there has been no running water and still has my 500euro deposit!? Do I have to pay as the property is inhabitable? Does he need to find me a property to rent in replace of the current one as there no water and I’m tied into a contract with him? What are my rights in regarding this situation. Please please help as I struggling to work out what to do and I have a 3 year old too. Can I denacia the land lord?
Kind regards
Raymundo Larraín Nesbitt says:
Hi,
You are right, this is not the right place for this type of questions as they are unrelated to the article’s subject.
Please try posting in the general forum. Thank you.
Regards
Clare Muller says:
Hi
Do you know about the rental property law in the rural parts of Andalucia?
Thanks
Clare
Raymundo Larraín Nesbitt says:
Hi Clare,
Yes, this is ruled by Decree 20/2002.
I will be writing up an article and publishing it on the 8th of April on the matter.
You can view it in this link once it is published:
http://www.spanishpropertyinsight.com/tag/raymundo-larrain-nesbitt/
Regards
Raymundo Larraín Nesbitt says:
Hi Mar,
You raise two good questions.
Regarding the first one, there’s no change. As for if it will require a new ECJ ruling that is open to debate and I cannot comment on speculations.
Regarding the second question it’s the leitmotiv behind some of the recent legislative changes. They want to blur the lines between residents and E.E.A. / EU-residents bringing them both on par.
Regards
Raymond
Dave Axon says:
I don’t see the rental market as competition to hotels. They are different market segments of the tourist industry. I opted for villa holidays over hotels in the Mediterranean many years ago – before I came to live in Spain. So all the new regulations will do, if implemented in full, is drive tourists away (as rents rise and landlords drop out) from Spain to other countries where the regulations are less draconian. I am all for rules which govern health and safety, but Wi-Fi and air conditioning? Where I live the air conditioning system consists of something called opening the windows. These are client options, not God-given rights. If someone wants to rent a villa with (energy consuming) air-con and Wi-Fi, that is called the top end of the rental market, not all of it. And there are some areas in the campo where Wi-Fi is simply not an option, or it costs an arm and a leg and has to be contracted on an annual basis, even if the property is unoccupied. What then? Yet another example of bureaucrats shooting the country’s economy in the foot, or, as my friend Dennis puts it so succinctly, both feet. Well done Spain.
Guido says:
Thanks for the informative article, I can’t quite understand Spain seeming to shoot itself in the foot by implementing more ” red tape ” and bureaucracy in an already unstable economic time, surely now would be a great time to make renting leasing easier to kick start a already dragging economy.
Raymundo Larraín Nesbitt says:
You are welcome Guido.
It’s a bit baffling, yes. I am obviously positioned against these private holiday rental laws because they only add more red tape, as you write, at a time when the market is starting to pick up again. They are counterproductive and impractical to say the least. I can only hope administrations get a grip and be lenient when it comes to fining landlords that fail to comply. But then politicians are not businessmen.
The only logical reason I find to enact these laws, besides throwing a nice lifeline to the hotel industry, is to force undeclared lets to come into the light. Up until now the tax office tracked down undeclared lets indirectly by cross-checking unexplained electricity and water consumption in properties that owners claimed stood ’empty’ or else directly by sending inspectors on-site to poke around. Taxmen carried out 7,410 physical visits last year to detect undeclared rentals. More on this from a press release from the tax office’s website:
http://www.agenciatributaria.es/AEAT.internet/en_gb/Inicio/_componentes_/_Notas_de_prensa/La_Agencia_Tributaria_envia_al_Sepblac_un_listado_de_705_contribuyentes_de_la_Declaracion_Tributaria_Especial_por_indicios_de__eo_de_capitales.shtml
With the new holiday rental laws landlords are now forced to register their holiday lettings in a special registry in order to attain a ‘touristic rental licence’. It will be child’s play for the Spanish Tax Office to cross-check undeclared lets against the new touristic rental registries of each autonomous community. Spain’s coffers are bereft after a prolonged eight-year recession, so this measure helps to prop them up by squeezing out a little extra from law-abiding taxpayers. Every little helps.
Jamie Brooks says:
When will you know more info on the Canaries?
Raymundo Larraín Nesbitt says:
Hi Jamie,
The Canary Islands passed their own holiday rental law on the 28th May 2015:
http://www.gobiernodecanarias.org/boc/2015/101/001.html
I’ll update my article. Hope that helps.
Regards
Raymundo Larraín Nesbitt says:
Hi Maitland,
In reply to your comment, this article was published before (March 2015) the Holiday Rental Law in the Canary Islands was passed (May 2015).
You can find the new law here in the C.I. Official Law Gazette:
http://www.gobiernodecanarias.org/boc/2015/101/001.html
Regards
Christopher Turnbull says:
Hello Raymundo, my partner and I have been reading your informative articles as we have a horrid situation with our landlord, and have been doing as much research as we can to find out what we should do – thanks for all the information you have published !
Our problem is that we moved into a house in Spain 3 months ago (on an 11 month contract) and the landlord (British) is refusing to acknowledge or fix any of the (many!) problems we have reported, and has told us to vacate by the end of September. We are up to date with the rent and are trying to be reasonable and get him to, for example, have the broken tumble dryer repaired/replaced but when we email him with another try to get him to be reasonable and sort out the problems he just throws his toys out of the pram and tells us we already have notice to leave, and refuses to even respond to, never mind address any of the issues we raised.
We have no intention of leaving, we’ve spent a lot of money relocating to Spain, specifically this place as we have a lot of furniture and there is no access for large vans in the last 5km to the house so it was a very costly multi-vehicle move and would be very costly again to leave the property. We have only just settled into the house, and in any case there is no provision to give us notice to leave in the contract.
If he won’t do it, we would like to start fixing things ourselves and charge the repairs to the tumble dryer and numerous other items such as broken pool equipment, broken pool lights (all broken when we arrived), and the like against the rent (and have asked permission to, but not had any reply, other than to tell us to leave) but are wary of doing so without his permission (and your advice in articles hereabouts backs this up), but in the end, if he’s not going to fix it, we need to do so as for example, the dryer is part of the inventory and has never worked. In the advert for the property it even claims that the dryer is brand new, but it’s clearly several months old, now we have looked closely.
What position might we be in if we tell the landlord that unless he starts sorting out some of the problems we will stay in the property and pay no more rent – we will not be scared out of the place and will stand behind our rights. We don’t want to make ourselves the bad guys legally by refusing to pay but we have the right to have these things fixed surely, so need to do *something*, and the only leverage we have is the rent.
We will have to get a solicitor some time soon I imagine, but I was wondering if you had any advice about how to get a landlord to sort out problems instead of effectively telling us to **** off when we ask when something is going to be done about problems X, Y & Z.
Any advice appreciated,
Best regards,
Chris
Raymundo Larraín Nesbitt says:
Hi Chris,
First point would be to determine on whether you are in an 11-month contract or else in a standard three-year lease. In which case a landlord may not ask you to vacate ahead of the three-year period except for a number of legal reasons I won’t go into. The majority of 11-month contracts are a sham and can be easily morphed into three-year contracts.
As for the disrepair, same as the UK, you will be handed an inventory that will act as an annex to the Tenancy Agreement. If you sign on the dotted line you agree that all the contents in the household were in full working order. The presumption works against the tenant ex Art 1.562 SCC. The onus falls on you to prove otherwise i.e. at the time of signing you added a clause whereby you highlighted a number of faulty items.
It can be agreed by both parties, on mutual consent, to withhold rental monies if you are paying for the repairs yourselves. But it must be consensual and not unilateral.
You cannot withhold rental money as ‘leverage’; this is a big no-no highlighted in my articles. E.g. Renting in Spain: Top Ten Mistakes
http://www.spanishpropertyinsight.com/2015/03/06/explaining-the-latest-changes-to-spains-rental-laws/
On withholding money you are automatically “on the wrong side of the law”, as you write, on being on breach of contract.
If you were aware of all these items that needed repairing prior to signing why didn’t you include them in the inventory list and highlighted it at the time? Items that are damaged by normal wear and tear (tumble dryer) are presumed the tenant’s fault and need to be repaired by him at his own expense (Arts 1.563 & 1.564 SCC and 21.4 of Spain’s Urban Tenancy Act) unless he can prove otherwise as stated above.
How can you walk into a property in then knowledge it is riddled with problems and sign merrily on the dotted line? I’m afraid the law won’t be on your side Chris unless you have been careful and somehow worded into the contract all pre-existing flaws.
It is the duty of a landlord to fix any problems that impede the normal dwelling in a property i.e. leaking mains pipe. A broken tumble dryer does not fall into that category, nor broken pool lights. Did you hire a lawyer before signing this contract? Or was this just agreed in between yourselves?
I am sorry if this was not the reply you were looking for.
Regards
Linda says:
Dear Raymundo
I rent out my property for holiday lettings so it is fully furnished and equipped for guests. It is exclusively let to paying guests as the only time I visit is to go once a year to carry out maintenance. All the expenses I have previously deducted relate directly to the income earned from Spain. It is mentioned in your article that the allowance of expenses should translate into higher returns.
My returns are submitted by my Spanish solicitor but I prepare the figures myself as I previously worked in the tax office in the UK. Obviously systems vary but here the over riding principle of expenses was always that they must be wholly and inclusively incurred in the business. The nature of the holiday rental business takes a great toll on facilities used by guests and, for example, items such as bed linen, towels, shower curtains, kitchen equipment, furnishing etc need to be replaced periodically due to wear and tear directly caused by the paying guests. However, my solicitor has advised that such necessary renewals are no longer allowed. As I pay most tax in the summer quarter and most damage is caused in that period I purchased some replacement beach towels (they were almost threadbare), some replacements for stained bedding and replacement shower curtains that become severely soiled after each summer. However, my solicitor has disallowed all of these as she says renewals are no longer allowed despite the fact that they are so obviously directly related to the income. I also purchased some wood preservative as the pergola needs maintaining each year, which I do myself on my maintenance visit. The cost of this has been disallowed also. Rather than being better off I am much worse off and will no longer be able to afford to rent out the property if I have to bear the cost of all these ongoing necessary expenses, which seems contrary to the intentions of the regulations. Please could you advice if these necessary deductions are still allowable and if so which category they come under – maintenance? What would I tell my solicitor as evidence that they are allowed by the law?
Also they have not applied for a rental licence as far as I am aware despite the fact that I regularly ask if I need one. I have put everything in place myself in readiness – comprehensive insurance, WIFI,an EPC certificate etc. The property is under Cartagena in Murcia. Do you know if the license applies there yet? Many thanks from a very worried home owner.
Raymundo Larraín Nesbitt says:
Morning Linda,
Long story short, the maintenance expenses you quote would not be deductible post-crisis, sorry.
I mention that non-resident landlords will net higher yields because these deductions, which were previously ring-fenced for residents, are now open to non-residents following the ECJ’s landmark ruling 3rd of September 2014. Non-residents can now deduct maintenance expenses in equal footing as residents; which translates to higher net yields. That is what I meant.
Now we have that out of the way, we must examine what residents can actually deduct as maintenance expenses…
The same principle you quote in the UK is applicable here as per art 23 IRPF (Resident Income Tax law): Proof must be supplied that the following expenses are directly related to income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain.
That said, you cannot deduct everything nowadays, sorry. The Spanish Tax Office has grown more and more reluctant over the last years due to taxpayer’s deduction over abuse and has now sharply curbed what it qualifies as ‘maintenance expenses’ (regardless if in direct connection to the let as you point above). This must now be understood as (very) restrictive.
For example, before lawyers could deduct 50% of car expenses as directly related to our business but this has now been scrapped and the Tax Office no longer accepts it. They demand a case-by-case breakdown with litigation files case numbers to cross-check the information with our Law Society that on such a day we were in fact litigating before a law court to deduct car-related expenses (highway toll fees, petrol, parking tickets..).
The truth of the matter is that times are hard, more so in Spain, and every pound is a prisoner. The Tax Office will not part easily in testing times with taxes. So the ‘interpretation’ of rules are tightened in recessions. If we were in a financial boom I suspect they’d let you off and be more lenient about it as they wouldn’t be worrying sick on propping up the state’s coffers to make ends meet.
As for the Autonomous Community of Murcia, a new law on Tourism was passed (Ley 12/2013, de 20 de diciembre, de Turismo de la Región de Murcia) which in its article 26.2 and 28 defines ‘touristic apartments‘ but leaves the door ajar to further regulation on them.
http://www.borm.es/borm/documento?obj=anu&id=686851
To the best of my knowledge there is to date no further regulation on the matter in this region; so for the time being no holiday rental licence is required in the autonomous region of Murcia. That may change in the near future following the trend of neighbouring Autonomous Communities which are well ahead on this matter.
And by all means Linda, you should not be worried about this. You are well ahead in your game, following your post. In fact the Wi-Fi you have in place is not a legal requirement in Murcia at the moment; it makes your let more attractive and competitive, granted, but I stress it is, for the time being, not a legal requirement unlike in other regions of Spain.
Hope that helps.
Regards
Jane says:
Hi
Could you clarify whether I could claim the cost of the getting a plumber to issue the gas certificate needed for rentals please? He needed to carry out some works before it was issued.
Thanks
Raymundo Larraín Nesbitt says:
Hi Jane,
Doubtful as it is not directly related.
Regards
John says:
Hi Raymundo, I am a little confused with the wording in your article, specifically re lets which “normally exceed one month”. Are you saying the law affects properties which are let for periods of less than one month but in total are in excess of one month in any year; or do you mean the law only affects properties where the letting period is in excess of one month. Or both!
I let my house to holiday makers for periods of normally one to two weeks and in any year this can amount to a total letting period of about 12 weeks.
Thanks
Raymundo Larraín Nesbitt says:
Morning John,
Do you advertise your property in internet portals (i.e. Airbnb.com), newspapers, magazines, travel agencies etc.?
Do you let your property out by days, weeks to different people?
If the answer is yes to both your property is a holiday rental.
Regards
John says:
Hi Raymundo, yes I do advertise my property on a website and it is let on a weekly basis to different people. The legislation will then affect me.
Raymundo Larraín Nesbitt says:
Morning John,
Yes, it would.
You’d do well in acquainting yourself with your Autonomous Community regional holiday rental laws. As I write above, each region is empowered to pass their own law on the matter; however, not all regions have. This will avoid penalties on non-compliance. In some regions a holiday rental licence is mandatory.
Regards
sharon says:
Hi Raymundo, if i was to purchase a 2 bedroomed apartment in Mogan and rent one of the rooms to airbnb on short term, would that be a problem.
regards,
Sharon
Raymundo Larraín Nesbitt says:
Morning Sharon,
Is this Mogan in Gran Canaria (Canary Islands)?
A new holiday rental law was passed last year:
http://www.gobiernodecanarias.org/boc/2015/101/001.html
Holiday rentals require a touristic licence to let them (article 3); if you don’t have one and rent it out through Airbnb both them and you may be fined.
My advice is you hire a lawyer and apply for one.
Regards
EDIT: Anyone buying property in the Canary Islands should read this post first:
CANARIES: Owners of tourist apartments at risk of exploitation
http://www.spanishpropertyinsight.com/2016/01/22/canaries-owners-of-tourist-apartments-at-risk-of-exploitation/
Jane says:
Hi
Could you tell me if the Andalusia licensing law is still a draft please? I’m getting very mixed information. Our house is just outside the village boundary so is considered rural, would the license still apply to us? Thanks
Raymundo Larraín Nesbitt says:
Morning,
It has not been approved yet. Andalusia’s regional government (the Junta) have promised it will be approved by next summer 2016 (before high season). There is still some ironing out that is required as it has sparked a hot debate with landlords.
What licence do you mean? A rental licence? Not all regions require a rental licence; in fact, only a few do.
Rural lodgement still falls under holiday rental laws, where applicable.
You are welcome.
Regards
Jane says:
Hi
Thanks for the reply. I’m asking about the new licence that you have to apply for if you are renting out your property. The one which states you need air conditioning, wifi etc. We are in the Malaga Province so at the moment it’s only draft so I guess we just ‘watch this space’ to see when it comes into force. I’m presuming your newsletter will keep us informed?
Kind regards
Raymundo Larraín Nesbitt says:
Morning Jane,
No problem. I wasn’t sure if you were referring to a Licence of First Occupation or else a holiday rental licence.
I confirm that in Andalusia region the private holiday rental bill is still at a draft stage. I’m based in Málaga too (Marbella). This law will be approved by next summer 2016. At the moment you can rent out your property privately without any restrictions. At present, gadgets such as A/C, Wi-Fi etc are not mandatory in Málaga province on renting out. This will however change by next year.
You can be assured I will write up a detailed article when the Andalusia private holiday rental law is finally approved in 2.016.
And yes, you can always trust on SPI’s newsletter to keep you informed when the bill is passed.
Regards
Jane says:
Hi
Sorry one more question, we are considering a 3 month winter let. Are there any licenses/regulations we need for this? We only usually do short term holiday lets. I must say, it’s great having this forum so accessible. Keep up the good work.
Raymundo Larraín Nesbitt says:
Thank you.
No licences are required to let in your particular case for the time being
However, you should acquaint yourself with Law 13/2011 of Tourism in Andalusia which establishes some obligations for rural lodgings. In particular arts 37 – 39 require a pre-registration with the Junta (this is not a licence, merely a communication of touristic activities for a Tourism Services Registry).
Specifically rural lodgings are included in Art 40.1.d, 47 and 48. It is left to future regulation to develop this further. Which is when the private holiday rental law for Andalusia will come into play (mid-next year).
http://noticias.juridicas.com/base_datos/CCAA/an-l13-2011.html
Regards
Keiley Bunyan says:
Hi Raymundo
My neighbour rents out her property here in Spain, Valencian region. The lets are usually no longer than 2 weeks at a time. She lives in the UK.
She has been told that as she has a swimming pool it has to be fenced off ie locked gates etc from the house. I cannot find any evidence of this decree applying to an individual property although, of course I know there are regulations for community properties.
Do you know of any such law that applies to this type of rental?
Thank you
Raymundo Larraín Nesbitt says:
Morning Keiley,
I am not aware of such a rule for a private detached dwelling.
I know that communal pools are ruled by their own decree in Valencia.
You specifically mention it is not a community of owner’s pool, as communities can pass their own bylaws to approve the fencing of communal pools for security reasons i.e. underage children
Perhaps it is a local decree from the town hall where your friend has her property?
I’m sorry, I do not know the answer to your question.
Regards
holiday home rentals says:
Spain is a tourist favorite destination too. The holidays home laws should be flexible.
John says:
My partner and myself move to sitges in February 2016 and are looking to let out 2 rooms in our apartment through airbnb and we have to get a touristic licence number. How do we do this as need to do ASAP
Raymundo Larraín Nesbitt says:
Morning John,
If you are the landlord you must apply through the town hall for a letting licence. I strongly advise you hire a lawyer to achieve it as there will be plenty of red tape in the way.
I can assure you you will not achieve this licence by February for this takes several months on average; if in fact you achieve it at all, as Catalonia is taking a restrictive stance on granting new rental permits (which is precisely what I criticize in the above article as it artificially restricts competition in a free market economy).
This letting licence is required prior to renting out the property unless you (and or Airbnb) want to be fined. More on stiff fines here:
http://www.thelocal.es/20140707/airbnb-fined-30000-over-illegal-apartments
http://www.spanishpropertyinsight.com/2016/01/11/airbnb-in-barcelona-blessing-or-curse/
Regards
chris sullivan says:
I see little mention in your excellent article of the requirements for disabled access to rental property.
We tell renters there are 6 steps to our property, do we need to provide a ramp. Not sure it would help as they are quite steep.
Other facilities such as width of doors, access in bathroom etc would not be suited for unaided disabled access, what are the requirements under the new rules.
Raymundo Larraín Nesbitt says:
Hi Chris,
Yes you need to. Let me start by writing I am not an expert on these laws.
There is a national law that requires it: Decree 505/2007
http://www.juntadeandalucia.es/export/drupaljda/Personas_Discapacidad_decreto_download1_accesibilidad_espacios_publicos.pdf
You do not mention in which region your property is located in. When a developer applies for a Licence of First Occupation this is one of the controls that are made to grant it. But this national law came out in 2007, so if your property was built before said date it wasn’t really enforced till then.
Regards
Raymundo Larraín Nesbitt says:
Morning Tony Owen,
I do not answer queries through Facebook, sorry.
I suggest your son reads my new article on the matter: Andalusia’s Holiday Rental Law explained in English.
http://www.spanishpropertyinsight.com/2016/02/10/andalusias-holiday-rental-decree/
This article details all he needs to know for the region of Andalusia.
Regards
Christopher says:
Hola Raymundo,
Another excellent article, thank you so much!
Could you clarify something? I am non-resident in Spain and the rental income does not arise there or get paid there. Should I be accounting for it to the UK tax authorities or the Spanish?
Thanks in advance.
Raymundo Larraín Nesbitt says:
Hi Christopher,
Definitely the Spanish Tax Authorities. Following article 6 of Spain and the UK’s double taxation treaty of 2014:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/412302/spain-dtc.pdf
“Article 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property
(including income from agriculture or forestry) situated in the other Contracting State
may be taxed in that other State.
2. The term “immovable property” shall have the meaning which it has under the
law of the Contracting State in which the property in question is situated…
3. The provisions of paragraph 1 shall apply to income derived from the direct use,
letting, or use in any other form of immovable property.”
Non-residents, regardless if they rent out or not, are liable for Non-Resident Income Tax in Spain.
If you happen to rent out then you must declare and pay tax on your Spanish rental income. My article Non-Resident Taxes in Spain explains the liabilities landlords face on owning (and renting) property in Spain:
http://www.spanishpropertyinsight.com/2015/12/08/non-resident-taxes-spain/
You are welcome.
Regards
Christopher says:
Hi Raymundo,
Thank you so much for this.
Could you please clarify something for me?
You quote “1. Income derived by a resident of a Contracting State from immovable property
(including income from agriculture or forestry) situated in the other Contracting State
may be taxed in that other State.”
The word “may”; does that have some specific meaning in this context or does it also mean that such income possibly “may not” ?
Obviously it is much easier to cope with dealing with just one tax authority than two…
Raymundo Larraín Nesbitt says:
Morning Christopher,
This is really a question pertaining to English law as it is construing an English legal text.
From the Spanish side it means the State (Spain) where the real estate is located in can, at his sole will, tax income on rentals. The State where the taxpayer is resident (i.e. UK in your case) may NOT tax this income derived from lettings in another country (i.e. Spain).
Spain has effectively exercised this competence and does indeed tax income tax from non-residents letting out their properties as analysed in detail in my article Non-Resident Taxes in Spain:
http://www.spanishpropertyinsight.com/2015/12/08/non-resident-taxes-spain/http://www.spanishpropertyinsight.com/2015/12/08/non-resident-taxes-spain/
Regards
Amelie says:
HI Raymundo,
I leave in the UK and have a property in the Canary Islands and have been renting it out on a weekly basis for a couple of months now. My father has a property there (that we also rent on a weekly basis) but also lives there. The bookings are usually confirmed via UK websites, so I understand from the above that we need to pay taxes in the Canary Islands and not in the UK. I handle both flats when it comes to renting it out so everything is under my name in the UK. My father being a resident but me not being one (except from the EU), we are keeping track of our earnings separetly, however it usually goes to the same account in Spain. When we declare it to the government in the Canary Islands for tax purposes, do we have to declare it separetly as we are 2 individuals with 1 flat each or does it have to be together as the money is going into 1 account most of the time ? Also, when it comes to declaring the earnings, what happens if the money is received in a UK account instead of a Spanish account ?
Many thanks for your help.
Amelie
Raymundo Larraín Nesbitt says:
Afternoon Amelie,
All your queries are addressed in my article Non-Resident Taxes in Spain:
http://www.spanishpropertyinsight.com/2015/12/08/non-resident-taxes-spain/
1. The bookings are usually confirmed via UK websites, so I understand from the above that we need to pay taxes in the Canary Islands and not in the UK.
Correct, you must pay Non-Resident tax in Spain on your rental income.
2. When we declare it to the government in the Canary Islands for tax purposes, do we have to declare it separately as we are 2 individuals with 1 flat each or does it have to be together as the money is going into 1 account most of the time ?
You must declare it separately, yes.
3. Also, when it comes to declaring the earnings, what happens if the money is received in a UK account instead of a Spanish account ?
Makes no difference, the real estate is located in Spain and you are earning income on the rental that must be taxed in Spain according to the UK & Spain double taxation treaty.
Hope that helps.
Regards
Amelie says:
Thank you ! Very helpful articles and comments.
Raymundo Larraín Nesbitt says:
You are welcome Amelie.
Pablo says:
With regard to the new holiday rental regulations can you tell me if there is a specific type of fire extinguisher and first aid box required? If so what exactly do I need to purchase and where are these supplied in the Marbella area? Also is the ‘complaints book’ an official book to be applied for or simply a many blank lined book marked ‘complaints’. If it’s an official book where do you obtain one? Thank you.
Raymundo Larraín Nesbitt says:
Morning Pablo,
The newly published Decree in 2.016 no longer requires a fire extinguisher; that was only in the previous drafts.
I advise you to read my updated article Andalusia’s Holiday Rental Law:
http://www.spanishpropertyinsight.com/2016/02/10/andalusias-holiday-rental-decree/
A first aid box can be acquired from any ‘ferreteria’ (hardware shop) of which there are tons in Marbella.
A complaints book can be acquired online, for example, from here:
http://www.hojasdereclamaciones.com/
Hope that helps.
Regards
Nickie says:
Hi Raymundo
I wonder if you can help me understand the new rental law as it relates to cave houses in andalucia.
I have read the article above and looked into the decree but just can not find the specifics.
I am told that I need to look at the law from 2002 annex1 relating to rural property but have not been able to find it. Can you help please?
Raymundo Larraín Nesbitt says:
Morning Nickie,
Admittedly I am no expert in cave houses; my experience is limited to watching the Flintstones 🙂
You are looking for Decree 20/2002:
http://www.juntadeandalucia.es/boja/2002/14/1
Annex I
“6. Casas-cueva. Modelo de vivienda troglodita excavada en materiales blandos e impermeables de zonas rocosas. Se admite hasta un 50% de la superficie útil en construcción tradicional, debiendo asegurar una adecuada ventilación directa de las estancias sin ventana exterior.”
Hope that helps.
Regards
sam says:
Try finding a hotel that accepts 2 adults and 2 children without booking 2 rooms or a penthouse suite at £1k a night. If it was not for private rentals we would not be able to come to Spain.
Angela says:
Hi we were thinking of buying a property quite inland, inland of Granada, would this be classed as “rural”
Also do you have to inform the Spanish tax man of any takings from rental? or do you do this with the english tax man?
Raymundo Larraín Nesbitt says:
Hi Angela,
Without more information I cannot really say, sorry.
Any income derived from rental must be declared and paid to the Spanish tax man as the asset is located in Spain.
Regards
José Ignacio Marsá Valdovinos says:
Hi Raymundo. Thank you very much for your article of March 6th, 2015 on Holidays Rental Laws, to which I was referred recently by a friend and which I found extremely useful.
In the article you refer to an allowance of 60% of rental income which Spaniards have, and by implication should be available also to non residents from the EU. However, I recently checked this out with the Spanish Revenue (Agencia Tributaria) and they told me that this is not available to Non-Residents because it is a reduction and not a cost incurred in providing the rental. Did I misunderstand your article or the Agencia Tributaria?
Raymundo Larraín Nesbitt says:
Morning José,
Thank you for your kind words and for posting.
This allowance, as you correctly write, is only available to residents. Non-residents cannot benefit from it.
Mr. Carlos Rey Zamora, Director of the AEAT for Non-Residents in Andalusia, confirmed as much in recent talks held at Malaga’s Law Society.
So what the Tax Office told you is correct.
However, there will be resident expat landlords who may benefit from it. That’s why it is there.
Hope that clarifies.
Regards
Paul@paulwrightjewellery.com says:
Hi Raymundo,
You kindly advised that properties built perfectly legally in the 1970’s would not have been issued with any form of Habitation License as they did not exist at that time. As this is now required to register with the Junta to rent our property out, I am struggling at the first hurdle. Our block of apartments was built in the centre of Marbella during that period so we don’t have this document. I have approached the Town Hall in Marbella and they have informed me the only way they can provide a habitation license for my apartment (in order to apply to the Junta) is to obtain a certificate signed by an authorized technician and approved by the Bar Association. This certificate must contain the following terms:
a) End of works final date
b) Conservation state of the building
c) Installations and facilities
d) Suitability for the intended purpose
e) Cadastral and Registrar reference
f) Urbanistic conditions
In addition they may need all the documentation that may support the correct operation of the installations of the building
and, if needed, a certificate issued by the suppliers companies that ensure that no works are required in order to access to the building.
I have no idea how to go about all of this or what it is likely to cost! How do I find a genuine ‘technician’ who can carry this task out? This seems quite an onerous and unfair requirement – just to get to the starting line! I would appreciate your advice and a contact in Marbella, if you know of one, to do this job for us if it has to be done.
Raymundo Larraín Nesbitt says:
Hi Paul,
Replied using SPIs private messaging.
Regards
SENEM says:
Hello,
Thank you for the useful info. I have some questions and I would be grateful if you could help me.
1. Catalonia law seems to date back to 2012 according to the info provided (Decret 159/2012). However, when I read the other articles, they suggest that the law requiring a license dates back to 2007. Which one is accurate: 2012 or 2007?
2. Does the license requirement make a distinciton between ‘rentals’ and ‘home sharing’? For example: I have flat in Barcelona – live there for 6 months, and I also have a flat in Italy – live there for 6 months. If I want to rent out my flat in Barcelone during the term I live in Italy, will I still be requried to obtain a license?
Thank you very much!
Best regards, S
Raymundo Larraín Nesbitt says:
Hi Senem,
Thank you for your kind words.
1. The law that rules on holiday rentals is from 2012. As from that date compliance is required to rent out as a holiday rental.
That said, Autonomous regions have freedom to establish if a rental licence is required or not. Not all regions require it. In 2005 rental licenes were applied for in Barcelona centre and in 2007 several hundred were approved. This predates the holiday rental law from 2012.
The fact is that you cannot offer holiday rentals without a licence in some parts of Barcelona unless you want to face the prospect of huge fines.
2. If you rent short-term (less than 31 days or two or more times within a year) it is regarded in the region of Catalonia as a holiday rental and you must comply with the terms set out in Decree 2012. On top of this you need a rental licence from Barcelona’s town hall to offer a holiday rental.
Long term rentals do not require such licence.
Regards
Ele says:
Hello Raymundo
Firstly a big thank you for such a helpful and clear article. I have been searching for clear advice on allowable expenses which we can deduct against our rental income, and this has been the most enlighteningl!
Please could you help with two questions –
1) I have just submitted my quarterly non resident rental income tax return, and have for the first time asked for the 3% property depreciation as a deductible (having read about it here) – however our tax adviser says that this is not permitted, only residents get this. Is there an article in the law that I can refer them to that proves it applies to non residents?
2) For most costs, our tax adviser only allows us to deduct a proportion of the cost based on the number of days rented in the quarter. Example, for electricity, our cost is divided by 90 (days in the quarter) and multiplied by 47 (number of rental days). So in this example we can only reclaim approximately 50% of the total electricity cost, when in fact when the property is empty we still have running costs / standing charges, and as we have a heated pool (electric pump) we have to turn it on several days before the guests arrive to heat up. So the cost is significant even when the property is empty. Is there any precedent for allowing a proportion of utility costs in addition to the actual rented days proportion?
Finally, is there an English version of the actual law and list of allowable expense available anywhere? I followed this link at the bottom of the article but it is broken: Home Rental Taxation – Spain’s Tax Office Rental Advice in English (A.E.A.T. or Hacienda)
Thanks so much for your help!
Ele
Raymundo Larraín Nesbitt says:
Hi Ele,
Thank you for your kind words. I daresay you have more than just two questions.
Addressing your multipe, queries:
1. Following a landmark ruling of 3rd september 2014 there is no longer a tax discrimination between residents and non-residents when it comes to tax allowances (providing you are an EU or EEA resident). I wrote an article on the matter back in the day:
http://www.spanishpropertyinsight.com/2015/02/08/changes-spains-inheritance-gift-tax-law/
As for a legal quote, this one from the IRNR:
IRNR
Rentas obtenidas sin mediación de establecimiento permanente
6. Cuando se trate de contribuyentes residentes en otro Estado miembro de la Unión Europea, se aplicarán las siguientes reglas especiales:
Artículo 24 Base imponible
1.ª Para la determinación de base imponible correspondiente a los rendimientos que obtengan sin mediación de establecimiento permanente, se podrán deducir:
a) En caso de personas físicas, los gastos previstos en la Ley 35/2006, de 28 de noviembre, del Impuesto sobre la Renta de las Personas Físicas y de modificación parcial de las leyes de los Impuestos sobre Sociedades, sobre la Renta de no Residentes y sobre el Patrimonio, siempre que el contribuyente acredite que están relacionados directamente con los rendimientos obtenidos en España y que tienen un vínculo económico directo e indisociable con la actividad realizada en España.
2. It is correct what he claims. I say so as much in my article above. I expressly write that the expense must be directly linked to the rental:
“…these expenses are directly related to income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain.”
It follows that if a property stands empty you may not deduct expenses as they are not directly linked to the (rental) activity. A pro quota calculation is in order in such a case as suggested by your accountant.
3. Nope, there is no English version available; just my article above.
4. Yes I am aware the Tax Office removed their link for some reason.
I trust the above answers your queries.
Regards
Christer says:
Hi, I have a question about renting apartment. If you have an apartment in Tenerife that are not for short-term rentals, but only for long term rentals. What is the shortest time you can rent such an apartment and where can I read more about this in English?
Regards
Christer
Raymundo Larraín Nesbitt says:
Hi Christer,
I do not understand your query. You should be asking the other way round; how long does a long term rental last?
A long term rental can be for up to three years, regardless if you – as landlord – agree to it or not. It is the tenant who decides year-on-year if they wish to renew (or not) the long term tenancy with a maximum of up to three years plus one.
I strongly advise you read my article on long term rentals (Spain’s Tenancy Act or LAU in Spanish) and learn the legal implications this has for you:
http://www.en.larrainnesbittabogados.com/article.php?id=58
I get the feeling you are trying to circumvent short-term holiday law restrictions marketing your property as a long term one without fully understanding the legal implications this has for you as landlord. But I may be wrong.
Regards