Rental property taxes in Spain, regulations and laws

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Posted and filed under Paperwork (NIE, Residencia, Padron), Property in Spain.

Rental property taxes in Spain, regulations and laws

Do you, like thousands of others, rent your property in Spain? Are you paying the right tax? Can you legally rent your property in Spain?

This is confusing so please remember if you want Spanish Solutions to deal with it all – we are delighted to do so.

The new laws all began in Spain a couple of years back due to pressure put on the Spanish government by the hotel industry. New rules were introduced to the private property rental market in a bid to curb the growth of AirBnb and Tripadvisor. Laws passed in parliament included fines of many thousands of euro for non-compliance with the new rules.

So how does it all work?

First let’s start on actual property rental tax. You, as a landlord in Spain are obliged to pay taxes per quarter  if you rent your property either short-term or long-term in Spain. No questions asked, you must pay this.

If you are a resident, you can pay this tax when you make your yearly returns. On the other hand, if you are a non-resident, you must pay the tax quarterly.

However,…. you cannot pay this tax unless you are up to date with the requirements. Remember the town hall is actively seeking landlords who are non-compliant.

How do you become legal when renting your house in Spain?

To begin with you need three documents before you can legally rent a house here.

Habitation certificate

Probably you have this already depending on when you purchased your property in Spain and which legal company you used to do your property transfer. If for some strange reason you don’t have it, Antonio our architect can organise it. The certificate of habitation is not cheap due to the fact that you need to pay the town hall too. That’s all included in the fee we give you.

Property compatibility certificate

This is simple but time consuming.

Property rental licence

Once you have your compatibility certificates you then apply for the actual licence. It’s going to take a further three months in many cases. The problem is you cannot pay your taxes without having this licence.

The next thing you, or your rental company, must do is register the personal data of your tenant with the local police. It can be done online but it requires two visits to the local police station. The first visit is when we file the relevant documentation with the police, produce your deeds, licence etc

The police station in Torre de la Horadada, our local station, can take as much as two months to notify us that they have processed this information. The local police station in Torrevieja is considerably quicker.
Once you have notification you need to go back down to the police station, for the second time in person, and finish the application. Spanish Solutions will of course do this all for you for a fee. At this time the police station issue you with a code where buy you can register your tenants online.

Don’t forget you must by law, display inside your front door, a certificate issued by the Valencia community to say that you have your license in place. Otherwise your tenant can report you as you are breaking the law.

We know none of this process is easy or cheap. Our strong advice however is that if you are renting your property this summer either short-term or long-term start now.

One of the ways the government here can control the amount of people using rental sites like bookings.com etc is to start issuing fines. Be careful, get it done soon, get it done properly and you’ll have nothing to worry about.

The Spanish property rental market is still very lucrative especially now with Spain having in 2018 officially become Europe’s most visited country. We advise you to take advantage of the tourism boom here just make sure you’re covered. Any queries please contact enquiries@spanishsolutions.net

Ian Comaskey

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