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Taxes on Holiday Rentals

The tax amount you pay for letting out your property in Spain will vary and depend on your residential status. There are 3 possible scenarios:

  • Residents in Spain: property owners with legal residency in Spain declare their rental income as a part of their regular tax return (“IRPF”, “rendimiento de capital inmobiliario”). Regarding this, EU-residents (also EEA citizens) are entitled to have the same deductions as Spanish citizens.
  • Non-resident Europeans: Whether living abroad or not, any European person renting out a house in Spain has to pay foreign tax, also known as IRNR (“Impuesto sobre la Renta de No Residentes”). Property owners have to pay the net rent, in other words: incomes minus expenses. These expenses can only be deducted if you can provide a fiscal residence certificate in your home country .Some of the expenses that can be deducted are: tax property (IBI), home insurance, house value devaluation, community expenses, legal defense (lawyer), mortgage interests, maintenance and advertising expenses.
  • Non-EU, non-resident landlords: they need to pay the full tax, no deductions neither allowances are considered.Taking all this into account, it seems that the outcome of Brexit will raise the tax burden of British citizens letting out their Spanish properties.

As for the current tax rates, these were the applicable percentages in 2019:

  • For EU and EEA residents: 19% tax
  • Rest of the world: 24% tax (Non European members cannot deduct expenses)

From 01-01-2021 British citizens, as citizens of a non E.U member state, will have to pay from the 19% to the 24% for the incomes they obtain for the rental of their properties in Spain. Besides, any kind of deduction related to rental expenses will not be possible, so their fiscal tax bill will be bigger, because they have to declare and pay for the gross income.

Non residents declare their rental revenue by filling in the 201 Form. For residents in Spain, the form is the 100.

On the other hand , owners who rent their houses in Spain are required to declare rental income through the Form 100 or the Form 210 depending if the owner is a tax resident or not in Spain . What information should be provided on the Model 179. Identification of the owner or owners of the property, of the holder of the right to lease the property and the people or entities renting the property. Identification of the property (full address) with specification of the cadastral reference. Number of days in which the dwelling is rented for touristic purposes. Rental Incomes received by the owner of the property. Means of payment (transfer, credit or debit card or other means of payment) (optional). Deadlines and Form of submission of the Model 179 Form 179 will enter into force in July 2018, and those required to file this return will be required to provide information for the entire 2018 period, including the first two quarters of the year.

Form 179. Declaring taxes on holiday lettings in Spain

Form 179 must be filed on a quarterly basis during the calendar month following the end of each calendar quarter, as is the case with the quarterly VAT filing. As an example, the first quarter will be settled in April and the second quarter in July. In summary all the owners that have rented their property in Spain and do not declare the incomes , according to the new law from 2018, the tax office, with the information received through the Form 179, will know all the necessary details to claim the taxes for rental incomes and the corresponding fine.