A Detailed Guide for Individuals and Companies
Short-term property rentals in Spain are becoming an increasingly popular source of income, particularly for tourist apartments. However, to ensure proper tax compliance, it is essential to understand the applicable regulations, whether you operate the property as an individual or through a business. This guide provides a detailed overview of taxation rules and available options.
1. Taxation of Property Rentals by Individuals
If you are a foreign national who owns a property in Spain and rents it out, you are subject to the following tax obligations:
Reporting Requirements
Rental income must be declared to the tax authorities, specifying the periods during which the property was rented. Failure to report this information may lead the tax office to assume that the property has been rented out for the entire year.
Tax Returns and Deadlines
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The annual tax return must be submitted by January 20 of the following year.
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If the tax payment is made via direct debit, the tax return must be submitted electronically by January 15.
Deductible Expenses and Depreciation
Rental-related expenses fall into two main categories:
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Fully deductible expenses:
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Cleaning services
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Accounting fees
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Minor repairs
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Depreciable expenses:
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Furniture, electronic appliances, air conditioners—typically depreciated over 10 years.
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2. Taxation of Rented and Non-Rented Days
Taxation of Non-Rented Periods
If the property is not rented throughout the year, tax is still payable for the vacant periods. The tax is calculated as follows:
The tax must be paid by December 31 each year.
Taxation of Rented Periods
The taxable base is calculated as follows:
The applicable tax rates are:
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EU/EEA residents: 19%
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Non-EU residents: 24%
Depreciable expenses must be allocated proportionally to the rented period. For example, if the property is rented for 80 days in a year, the proportion of depreciable costs is calculated as follows:
This means that only 22% of the depreciable costs can be deducted from the taxable base.
3. If the Property is Owned by a Spanish Company
If the property is rented out through a Spanish-registered company rather than as an individual, different tax rules apply.
Corporate Tax
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The company pays corporate tax (Impuesto sobre Sociedades).
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The standard corporate tax rate is 25%, but newly established companies may benefit from a reduced 15% rate for the first two years.
Advantages of Expense Deductions
Companies have more flexibility in deducting expenses, including:
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Employee salaries
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Marketing expenses
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Advertising costs
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Operating expenses
VAT (IVA) and Tax Obligations
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If the company provides tourist services (e.g., cleaning, reception, maintenance), the activity may be subject to VAT.
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The VAT rate is 10% in the tourism sector, but for some services, it may be 21%.
Tax Filings
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Companies are required to submit quarterly tax returns instead of annual ones.
4. Summary
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For individuals, rental income is subject to 19-24% tax, with expenses deducted proportionally.
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For companies, rental income is subject to 25% corporate tax, but more expenses can be deducted.
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VAT obligations may apply if the company provides additional tourist services.
If you rent out property in Spain, understanding tax regulations is crucial for compliance. Consulting a tax expert is recommended to ensure full compliance and optimize tax efficiency. 📌🏡
