The New Law for Holiday Rentals: TAX implications

Although the new law for Holiday rentals doesn’t come with any tax modification, we are not surprised to see that most of the questions raised by our clients in connection with this are related to taxes. Some of them they even talk about the “new tax for holiday rentals”!

It goes without saying that receiving rental income is something that has always been a legal obligation to declare, therefore, there is no ‘new tax’ as such, but more a stricter control on ensuring that rental income is being declared, so let’s take a closer look at this.

The incomes obtained from renting out a property in Spain, must be declared and taxes must be paid in Spain, this is nothing new. However, renting out properties in Spain without declaring rental incomes seems to be a common practice. The Tax Office is aware of that and a clear message has been sent by the fiscal authorities advising that this situation is going to change. In fact, in the current Annual Tax return campaign, one of the “slogans” of the Tax Office has been “You had better declare your rental incomes, because we can find out if you are renting out your property” in explicit reference to the properties advertised on the internet, although they do have other ways to find out if you have tenants in your property, i.e. electricity bills, etc.

So even without the new law for holiday rentals, the time to start declaring these incomes was arriving, so, if you find yourself now needing to register your property, which means informing to the authorities that you do rent it out, the tax implication will be the required declaration of your rental income.

For Non Residents in Spain who resides in other EU countries (plus Norway and Iceland) this type of income is rated at 19% on the profit obtained. Residents in Non EU countries pay 24% and can’t deduct any expense, so they pay on the income, not on the profit.

Finally, it is important to remember, that no matter whether you receive incomes from rentals or not, you always have to declare and pay your annual Income Tax for Non Residents, you will not pay twice if you have already paid for rental incomes in the same period.

Please visit the FREQUENTLY ASKED QUESTIONS (FAQ)  page for this tax HERE

You can read more about the Income Tax for Non Residents clicking here

At Bravo Legal, we can take care of you quarterly and annual income tax declarations. Please contact us for more information.

Miguel Angel Bravo
Lawyer
BRAVO LEGAL Lawyers & Accountants
Calle Córdoba n°9, Oficina 5, 29640-Fuengirola, Málaga (Spain)
Telf. (34) 952463499 or (34) 952593680
e-mail: info@bravolegal.es
www.bravolegal.es