Tourist rental – Part I
What is it?
In recent years the emergence and subsequent exponential boom of a new type of private accommodation for tourism, popularly known as “tourist rental”, has taken place in Spain. There are many owners and tenants who, through digital intermediation platforms, decide, respectively, to lease and sublet their apartment to foreigners for short periods of time. This is due to the economic-financial logic of the market: the purchasing power of the average foreign investor is currently greater than that of the average Spanish investor. Therefore, in the same way that real estate sales in Spain have benefited thanks to the increase of foreign investors, entrepreneurs in the housing leasing sector have tried to maximize their benefits by giving priority to the time factor and focusing
their services towards a profile of potential customer with greater purchasing power.
Is this activity legal?
Obviously yes! As long as all the requirements established by current legal regulations are met. In Spain, this regulation is assigned to the Autonomous Communities, so it is possible to find differences between points in the territory. For example, in Catalonia, it is necessary to previously communicate the start of the activity to the competent City Council to obtain the so-called “tourist license” that enables its development.
¿Do you have tax implications?
Of course. Any provision of services is a source of income for the provider (either in the IRPF if he is a tax resident in Spain, or in the IRNR if he is not) and, as such, is subject to taxes that tax his consumption (in Spain , VAT, or ITPAJD).
But before delving into it, which we reserve for our next article, it is necessary to differentiate the concept of tourist rental from both the rental of traditional housing and the accommodation services of the hotel industry, since its tax treatment is different. We will only refer to the first one in this article.
Tourist rental Vs Traditional housing rental.
As we said in the beginning, one of the main characteristics of the tourist rental is the temporary transfer of use of an apartment for short periods of time. On the contrary, the rental of traditional housing pursues a different objective, which is to satisfy the permanent need of housing of the recipient (¡we all need a place to call home!).
Tourist rental Vs Hosting services.
Here the differences are more subtle and difficult to appreciate; but while the first is mainly limited to the transfer of temporary use of a physical space along with a series of basic services, the second is characterized by offering complementary services, which are rather characteristic of the hotel industry.
Let’s see some examples:
“Basic” services typical of tourist rental:
• Cleaning and change of bed and bath linen provided at the entry and exit of the period contracted by each tenant
• Cleaning service of the common areas of the building (portal, stairs, elevator) as well as the urbanization (sidewalks and streets, green areas) in which the rented apartment is located
• Technical assistance and maintenance services for possible repairs of plumbing, electricity, glassware, blinds, locks and appliances
“Complementary” services typical of the hotel sector:
• Reception and permanent and continuous customer service in a space intended for this purpose
• Cleaning services and change of periodic bed and bath linen (not only at the entrance and exit of the client)
• Food and catering services, laundry, luggage storage, press, reservations, etc.
If you were interested in investing in the Spanish real estate market, you already have one more reason to do so: the possibility of carrying out the tourist rental activity, which will allow you to maximize the return on your investment during your tenure, and will be fully compatible with the private use of your apartment when you wish.
In our next article, we will analyse in more detail the fiscal implications of the development of the tourist rental.
This article is written by one of our independent partners in Spain, Maite, who is one of our Fiscal partners in Catalonia. Check her profile.