At the moment the rate for VAT applicable for tourist Rentals is 10%. The application of this rate depends upon the complementary services that are offered.
We can take as a reference the following services expressly determined by the General Directorate of Taxes to be considered as complementary Services that are directly related to the hotel industry:
· Weekly cleaning inside the accommodation.
· Weekly change of linen and bedding.
On the contrary, the following services are NOT considered to be directly related complimentary services:
·Entrance and exit cleaning service.
· Linen and bedding change service provided only at entrance and exit.
· Cleaning services for common areas (i.e. foyer, stairs, and lifts), nor in the urbanization (i.e. green areas, entrances, and pathways).
· Technical assistance for any repairs carried out for plumbing or electrical faults, glass, lock, or appliance breakage or repairs.
Following are some examples showing the rate of tax that should be applied in each situation:
1. When the owner of the property rents to a tenant directly and does not provide the complementary services stated in the first paragraph the rental paid would be exempt from VAT.
2. When the owner of the property rents to a tenant directly, but in this case does provide the complementary services stated in the first paragraph, the rental paid would be subject to the application of 10% VAT.
3.When the owner of the property rents to professionals or businesses in order to exercise their professional activity in the property then the rate of VAT to be applied would be 21%, as it is considered that as an intermediary is involved that the owner is not directly providing any services. Thus the intermediary would be the one to charge 10% VAT directly to the tenant.
José Manuel Garzón Macho – Senior Partner
Axarquía Solicitors is part of Marbellasolicitors SLP, a group of lawyers and tax specialists that have over 15 years experience assisting foreign buyers and vendors in Andalucía. Therefore do not hesitate to contact us for advice on this or any other topic that might interest you, for a free, no obligation appointment to discuss your particular case with one of our specialists.