Taxes on Holiday Rentals
The amount of tax you pay for letting out your property in Spain will mainly depend on your residential status. There are 3 possible scenarios:
- Residents in Spain: property owners with Spanish residency declare their rental income as a part of their regular tax return (“IRPF”, “rendimiento de capital inmobiliario”). In this regard, EU-residents (also EEA citizens) are entitled to the same deductions as Spanish citizens.
- Non-resident Europeans: despite living abroad, any Europeans renting out a house in Spain have to pay foreign tax, also known as IRNR (“Impuesto sobre la Renta de No Residentes”). Property owners need to pay the net rent, in other words: income less expenses. These expenses can only be deducted if you can provide certificate of fiscal residence in your home country (HMRC in the case of the UK). Some of the expenses that can be deducted are: tax property (IBI), home insurance, value depreciation of the house, community expenses, legal defense (lawyer), mortgage interests, maintenance and publicity expenses.
- Non-EU, non-resident landlords: they need to pay the full tax, no deductions neither allowances are possible.Taking all this into account, it appears that the outcome of Brexit will influence the tax burden of Britis citizens letting out their Spanish properties.
As for the current tax rates, these were the applicable percentages in 2017:
- For EU and EEA residents: 19% tax
- Rest of the world: 24% tax (Non European member cannot deduct expenses)
Non residents declare their rental revenue by filling in the 201 Form. For residents in Spain, it is the 100 Form.
The Spanish Revenue, in order to bring into the open all the undeclared tourist rentals, according to the Form 179 approved by RD 1070/2017 of 29 December, this new law obliges to the companies that intermediate to supply accommodation for tourist purposes such as Real Estates, Airbnb, Booking com, Homeaway to submit the From 179.
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 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.