Here I explain how seasonal lets in Spain can be a viable alternative to Spanish holiday home rentals in some instances.
Marbella-based Larrain Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.Article copyrighted © 2017. Plagiarism will be criminally prosecuted. Photo: Cala Llombards, Majorca, Spain. By Raymundo Larraín Nesbitt Lawyer and Director of Larraín Nesbitt Lawyers 8th of October 2017
Are you fed up with the intrusive and obnoxious new regulations on private holiday home rentals in Spain? *cough* Balearics *cough*
Did you know that, at times, landlords can circumvent these restrictive regional regulations offering their properties as seasonal lets instead? I.e. no need for pesky rental licences. Were you aware that thousands of properties all over Spain are rented out legally every year as seasonal lets to tourists without much of a hindrance?
Interested? Read on.
- Holiday-home rental: short-term contract that spans between a day and a month (varies between regions in Spain). Accommodations are offered through touristic channels (see further below) such as online property portals with an online booking system.
- Seasonal let: is a type of contract whereby a landlord rents a property not as a permanent abode. It can be either short-term (days, weeks) or long-term (months, years). Seasonal long-term lets are NOT subject to the raft of tenant entitlements set out by Spain’s Tenancy Act (which only apply to rentals that constitute a permanent abode) and most certainly do NOT require a rental licence.
Comparison: Holiday Home Rentals vs. Seasonal Lets
Private holiday home rentals
|Applicable law||regional holiday home regulation||Spain’s Tenancy Act (LAU)|
|Rental registration required||yes||no|
|Rental licence required?||yes, in some regions i.e. Balearic Islands||no|
|Commercialization (offer)||touristic channels||forbidden to use touristic channels|
|Online booking system||yes||no|
|Accommodation time||less than 2 months (varies between regions)||no time limit (days, years)|
|Can you rent out individual rooms?||yes||yes|
|Guest number limitation||yes||no|
|Accommodation mandatory requirements||yes i.e. cleaning service, A/C||no|
|Place of permanent abode||no||no|
|Rental deposit||varies||two-month rental|
|Subject to regional property inspections||yes||no|
|Fines (non-compliance)||humongous. Varies significantly between regions.||no|
|Civil liability insurance required?||yes, in some regions||no|
|Forbidden to rent out||yes, in some regions||no restrictions|
|Enforced||locally (with regional variations)||nationwide|
|Licence of First Occupation required?||yes||yes|
|Rental tax relief available?||yes||yes|
|Tax on rental income to be declared and paid in Spain?||yes||yes|
Advantages of a seasonal let
- No registration necessary: registration of the property for rental purposes is not required.
- No rental licence required: you do not need to attain a rental licence from the Authorities.
- No expensive improvements: you don’t need to install in your property WIFI, A/C, hire insurance to comply with the law.
- No property inspections: your property will not be subject of inspections by the regional Authorities.
- No fines: unlike holiday homes, seasonal lets are not liable to be fined by inspectors.
- No time restriction: unlike holiday homes, you can rent out for more than 2 months. You have the flexibility to rent out either short or long term.
- No intermediaries necessary: you will not be paying any commissions.
Disadvantages of a seasonal let
- You need to build up your own client base: if you are reliant on third parties (holiday platforms) to provide you with clients (as most landlords are), you cannot benefit from a seasonal let, sorry.
* With or without VAT?
In principle, as a general rule, VAT is not applied to holiday rental homes. However, if you offer any of the following services below your rental may be regarded as assimilated to offering hotel accommodation in which case you need to invoice everything with VAT which impacts the profit margin of the business increasing its costs:
- Concierge service.
- Daily changing of bed linen.
- Daily changing of bath towels.
- Daily cleaning of property/room.
- Room service (food and beverage), catering.
- Bed & Breakfast.
- Other ancillary hotel services such as: daily press, laundry cleaning, luggage storage service, accommodation booking (holiday reservation).
What is understood by ‘Touristic Channels’?
It is a bit of a grey area to be honest and may vary from one region to the next. Almost every region in Spain has approved specific regulation on what is understood by private holiday rental homes. Regulations vary from one region to another; you are strongly advised to seek legal expertise on your particular region. More details in my article Holiday Rental Laws in Spain for a full region-by-region list of approved holiday home rentals. Offering a property through a touristic channel automatically tags it as a holiday home subject to strict regional laws.
As a generalization, if a property is offered with any or all the following points it is regarded as being advertised through a touristic channel:
- It is marketed and offered by intermediaries. It is understood as companies or professionals who mediate between landlord and tenant in exchange of a commission such as: travel agencies, real estate agencies, online property portals (i.e. Airbnb, HomeAway, Tripping, Tripadvisor, Flipkey, VRBO etc.).
- Online reservation system enabled. Bookings can be viewed and made over internet.
Does this article mean that landlords have carte blanche to simply sidestep stern regional holiday regulation at their whim using seasonal lets instead?
No. It takes a case-by-case approach. Not everyone will qualify for a seasonal let e.g. landlords who market their properties through touristic channels.Talk to a lawyer, we can confirm if you can benefit from it and draft a contract for you.
Do I need to declare and pay tax on my rental income in Spain in both cases?
We have a competitive taxation service that deals with holiday home rentals accounting service (HRAS).On average, we are able to reduce a landlord’s rental income tax by 30 to 40% using tax relief (also available to non-residents). Ask us.
Most landlords wrongly assume they must rent out their Spanish property to tourists in compliance with all the new batch of regional rental laws featured in the press – which is simply untrue.
For decades, landlords all over Spain have been letting their properties out to tourists using seasonal lets without a problem. Seasonal lets at times are by far a superior option than renting out a property as a holiday home. In some regions in Spain the requirements of the new rental laws are so overzealous (read daft) that you are expected to offer a private home on par with the services offered by a four-star hotel. Seasonal lets cut through the red tape and may save landlords thousands of euros on the long run.
Not all landlords are required to offer their properties as holiday home rentals and comply with the cumbersome (and often expensive) new regional rental regulation. In some instances, landlords would be far better off to simply offer their properties as seasonal lets which do not have associated restrictive requirements i.e. you don’t need to install A/C in every room (Andalusia), you don’t need to attain a rental licence (Balearic Islands), you do not need to hire an insurance cover etc.
Seasonal lets exist since 1994 and you never hear landlords complaining over them – that should tell you something.
On the other hand, regional holiday home laws are fairly new (post 2013) and you hear most landlords moaning bitterly on them; or worse, not being allowed to rent out because they do not meet the stringent requirements set out in these laws!
You may be surprised to learn you can opt for a seasonal let instead saving yourself considerable time, money and hassle. You could avoid home inspections and steep fines altogether!
In some cases, even landlords who are forbidden to rent out their properties under the current regional holiday home regulation may be stunned to find out they can in fact rent them out as a seasonal let without much of a problem!
Don’t be goaded into using new rental contract types that only exist for the benefit of powerful hotel lobby groups. Be smart and make it easy on yourself – speak to professionals!
Be proactive, talk to a lawyer. We can make it happen.“Hecha la ley, hecha la trampa.” – Spanish saying. Loosely translated as “for every law, there is a loophole.”
Larraín Nesbitt Lawyers, small on fees, big on service.
Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, inheritance, and litigation. You can contact us by e-mail at email@example.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.
Article also published at Larrain Nesbitt Lawyers: Seasonal lets: an alternative to holiday rentals.
Legal services Larraín Nesbitt Lawyers can offer you
- Holiday Rental Accounting Service (HRAS)
- Conveyancing – Buying
- Registration of Holiday Rental Homes
- NIE Number (Tax Identification Number)
- 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 – Interview with The New York Times. June 2015
- Taxes on Buying Spanish Property – 8th July 2015
- Non-Resident Taxes in Spain – 8th December 2015
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- 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
- Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
- Renting in Spain – Landlord’s Taxation – 8th of January 2017
- Renting in Spain: Non-Resident Landlord’s Rental Tax Relief – 14th of January 2017
- Buying Property in Spain from a Private Seller (Resale Property) – 21st of February 2017
- Buying Property in Spain from a Developer (Off-Plan Property) – 8th March 2017
- NIE Number Explained – 8th May 2017
- Community of Owners in Madrid to ban Holiday Rentals – 29th of June 2017
- Holiday Home Taxation in Spain – 8th of July 2017
- How to inspect an off-plan property overseas – Interview with The Sunday Times. July 2017
- Holiday Rentals in Andalusia Made Easy – 3rd 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
- Seasonal lets: an alternative to holiday home rentals – 8th of October 2017
- Let-to-buy contracts: do not forget to add a clause forbidding sublets! – 20th October 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. VOV.2.017 © Raymundo Larraín Nesbitt. All rights reserved.