HOLIDAY LETTINGS
TAXES

IVA ( VAT):

The concept of holiday lettings is linked to housing

The lettings of any immovable assets are subject to I.V.A. BUT the lettings of houses which are to be destined exclusively as residences (permanent or temporary) are exempt from paying I.V.A. as well as garages and other components of the let residence.

The exemption does not cover lettings of houses which are not to be residences so, does not cover:

.-Lettings in which the tenant is a corporation (no residence here)
.-Lettings of houses as offices or commercial premises
.-Lettings in which the landlord provides hotel services.
The question in holiday lettings is, when are hotel services provided?
The tax agency had the opportunity to determine (In a query made by an Asturian owner) what are and what are not hotel services:

It is deemed as a hotel service if the landlord provides more services for the tenant other than the mere provision of accommodation ready for immediate occupancy.

In particular:

.- A weekly change of linen and cleaning of the house are deemed to be hotel services.

.- The cleaning and change of linen on entry and exit of each new tenant is not considered to be a hotel service nor is cleaning of the common entrance or stairs, the repair of any accidental damage or maintenance.

INCOME TAX

REGARDING INCOME TAX,  income from the letting of a house as holiday letting will be considered as revenue from an economic activity if, besides the accommodation, some of the hotel services as described above, are provided.

It will also be deemed as revenue from an economic activity if the landlord uses a premise to run the business and has a full-time employee.

If none of these conditions applies the income will be considered as an income directly from the capital to be declared in the corresponding annual tax return.

IMPUESTO DE ACTIVIDADES ECONOMICAS (ACTIVITY COUNCIL TAX):

Activity tax is a council tax. If , besides the accommodation hotel services are given,  the corresponding tax that each council charges for hostal services is to be paid.

If there are no hotel services, the periodical letting of a house is deemed to be also chargeable as an economic activity for the council if the value of the houses are over 600.000 € (0.10 the rate and a threshold of 600 €) BUT

TAX ACTIVITY COUNCIL TAX IS EXEMPT FOR TAX PAYERS THAT ARE NOT CORPORATIONS  (There is no charge for individuals).