HEALTHPLAN MAGAZINE

Declaring Property Rental Income In Spain Expat Tips

Over the years, Spain has become increasingly popular with foreign tourists and this has led many people to purchase property here with the intention of renting them out for extra income.

However, with renting out your property comes the responsibility of declaring any income derived from it to the Spanish tax man.

If you haven’t already registered property you will need to do so in order to obtain an occupation licence. You will then need to submit any income from the property on a quarterly basis.

In order to avoid any fines, non-residents will need to complete the form Modelo 210 (IRNR, Impuesto Sobre la Renta de no Residentes sin Establecimiento Permanente), which will need to be submitted by the 20th of April, July, October and January. If there is more than one owner, each will need to complete the form.

The Modelo 210 form will request certain information including:-

  • The identity of the owner/s of the property and its address
  • Cadastral reference for the property
  • Rental price plus expenses incurred
  • Time period in which the property will be let including number of days each month.

If you are resident in Spain, you will need to declare any income from renting your property via your IRPF yearly income tax return and form Modelo 100.

VAT of 10% will also need to be included in the return when renting a property out to tourists if you provide cleaning, meals or laundry services.

Finally, if a landlord subleases the property with a third party such as an agent or online rental platform, the rental will be seen as commercial and will mean VAT is increased to 21%.

The tax that you pay for renting out your property will depend on your residency status in Spain.

  • Resident in Spain - If you are resident in Spain, you will declare your rental income via your yearly IRPF income tax return. EU residents and those from EEA obtain are entitled to the same rates and tax relief as Spanish citizens. Current tax rate is 19%.
  • Non-resident living in the EU - EU residents have to pay IRNR (Impuesto Sobre la Renta de No residentes). Tax is charged on the net amount of rent, i.e. less expenses. Expenses may only be claimed if you are able to provide a certificate of fiscal residence in your home country. Expenses include I.B.I tax, mortgage interest, water and electricity costs, home insurance, community expenses, value depreciation of the property and legal fees. Current tax rate is 19%.
  • Non-EU and non-resident - Landlords neither living in Spain or from the EU will pay the full amount of tax and will not be entitled to claim any expenses. Current tax rate is 24% (No expense deductions allowed)

As you can see, if the UK leaves the EU, this could have an impact on the amount of tax British citizens pay when renting out their Spanish properties.

Registering Your Property

Before you can rent out your property in Spain, you will need to obtain an occupation permit from your nearest tourism registry and complete a declaration of responsibility.

You will also need to comply with specific health and safety, usability and bureaucratic requirements. These may include:-

  • Air conditioning for the months of May to September
  • Heating for months between October and April
  • A working telephone number so guests may contact you
  • A first aid kit
  • A complaints book
  • Provide guests with local tourist information
  • Drinking water
  • Electricity
  • Correct waste water
  • Make sure the property is clean, with bedding and household items.

The above does not constitute professional advice and is for informational use only. Please contact a professional tax advisor or legal representative at your earliest convenience.

Source: Tejada Solicitors