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Registration obligations for vacational properties in Valencia region

Holiday rentals. Valencia region. Registration process and taxes

There is a big confusion in the Spanish rental property market in VALENCIA REGION (“Comunidad Valenciana”), about the exact requirements, obligations, and process to develop the rental activity in the region of Valencia. After receiving dozens of demands of information at this respect, we have decided to elaborate this report to clarify the most common questions demanded by our clients and contacts.

Antecedents and laws:

There are 2 important aspects to consider when decided to rent your property as for touristic purposes:

  1. FORMAL OBLIGATIONS
  2. TAX OBLIGATIONS

 

FORMAL OBLIGATIONS

There is a general Decree for touristic activity, the Decreto 92/2009, from 3rd of July 2009 . This decree has the aim to:

– Confirming the legal obligations and responsibilities from landlords

– Guarantying protection of rights of to consumers  and users

– Control de activity of the landlords

This law says, specifically:

1.- What is a “Vivienda or Apartamento Turístico”? – It’s a property where there are the following conditions:

                – When there is a compensation for the use.

                – When there is immediate availability of the apartment.

                – When the “use” or “destiny” of the apartment is “touristic”

                – When it is done on “regular basis“. Regular basis means that you are in ONE of the following cases:

– When the rent is managed by big touristic operators/companies

– When you publish the property in touristic channels (internet, newspapers, etc).

– When even not being “a company”, you make some of these services: property maintenance and repairing, room service, cleaning apartment, toilets, etc, washing private clothes or apartment equipment (sheets, towels, etc.), luggage custody, etc.

So, when you are renting your property for “residential” purposes, with medium-long term of families or individuals renting it for “living” and not for “tourism”, then, your property is out from this “touristic property” regulation. “Residential rents” will be regulated by the general law of renting (or “Ley de Arrendamientos Urbanos”). So, you will not need to follow these formal requirements of registration, But, as explained below, you will need to declare your rental incomes for Spanish taxes.

2.- What are the formalities to develop this activity? –Registration in the Holiday Rental Valencian Registry (HRVR).

Despite of different interpretations of the law, only those owners with MORE THAN ONE property for rent have the obligation to register in the Valencian Holiday Rental Registry. So:

               – If you only rent  “one property”, registration is “voluntary”, so, then there is no obligation to register in the HRVR.  But, if you decided not to register then you have the obligation to inform the tenants that the property is not registered, so, not covered by the legal requirements and standards of quality regulated in the law.

                – If you rent from 2 to 4 properties, then, you have to register as a “particular”.

                – If you rent more than 4 properties, then, you have to register as a “company” or “business dealer”.

As conclusion, if you have ONLY ONE property to rent, it is not necessary to register it on the registry, but you can do it if you decided to.

But, even in the case you decided not to register your property in the registry from Valencia, your property must fulfill with the legal standards of quality and equipment as in the following section.

3.- Property Requirements-Legal standards of quality and equipment:

Every property, registered or not registered, offered in the market as rent for touristic purposes, must fulfill the requirements established in the law for any of the classifications considered: “Standard”, “Primary” or “Superior”. In order to register the property, it may get, as minimum, the “Standard” requirements.

The annex of the law details the requirements from each of these classifications, in terms.

As well as the requirements established by the law, properties will be offered to clients in perfect conditions of habitation, conservation, clean, and will all utilities and services ready for the first day of occupation.

Owners cannot demand more than 250 EUR to clients as per deposit/bond/guaranty, except if buyers expressly agree with a higher amount.

OTHER FORMAL OBLIGATIONS:

In addition to the eventual formal and tax obligations as required by the law, we specially recommend you the following:

  1. Architect certificate: It is very important to obtain advice by specialists in order to confirm if the property fulfils with the requirements as per the law. So, it will be necessary and architect to visit the property and to certify if the property is ready to be rented.
  2. Energy Performance Certificate: Recent Spanish normative forces landlords to get an Energy Performance Certificate to renting properties. So, this certificate must be obtained before offering the property in the market for renting it. Click here to more information about Energy Performance Certificate requirements.
  3. House insurance: As landlord, we specially recommend you to contract an insurance to cover container, contents, and civil responsibility. Click here to know more about insurance when renting.

If you have already contracted an insurance for your property, and then you decided to rent it, then it is very important you INFORM to insurance company about this fact. Otherwise there will be high possibilities the insurance company does not cover damages created by non-declared activities.

4.- Registration process

a) Format: You have to fill the official form. Click here to get it. Please, note that this form is a “declaración responsable” (or “declaration of responsibility”) where you declare, and CONFIRM under your own responsibility, that the details and information included are TRUE, being direct responsible of the content included.

So, if the information contained is not correct (for example, you declare that the minimum size of the bedrooms are 8 m2, when they are less in real), you may be responsible from false testimony, fraud, etc.

Thus, if you are not 100 % sure that your property requires ALL the conditions to arrive to a “Standard”,  or to see if your property may be a “Premium” one, then, contract the services of an architect to make a survey and to check and certify that you that your property fulfills these conditions.

b) Registration. Once the format is filled, you have to present it in one of the Valencia Government offices in Alicante, Valencia, or Castellón:


Registro del Servicio Territorial de Turismo – Alicante
C/ Churruca, 29 – 03003 Alacant/Alicante

Registro del Servicio Territorial de Turismo – Castellón
Avda. Hermanos Bou, 47 – 12003 Castellón de la Plana

Registro del Servicio Territorial de Turismo – Valencia
Pl. Alfonso el Magnánimo, 15 – 46003 Valencia


You will receive a document to confirm the registration of is complete. Obtained the registration number, you have to register it in ALL the publicity, formats, contracts, etc derived from your activity.

OTHER FORMAL OBLIGATIONS:

As ex

5.- FINES

Offering services without the obligatory registration may have the following consequences:

– Fines up to 90.000 EUR

– Suspension of the activity on that property up to 3 years

– Suspension of the activity to the owner up to 3 years


FISCAL AND TAX REQUIREMENTS

A) FORMALITIES – DECLARATION:

When you own a property, and you do not use it as permanent residence, EVERY YEAR, you have to present tax declaration on your property, And this, even if the property is rented, or non rented. And this is done through an ANNUAL TAX DECLARATION.

And, when you rent a property, and you receive an “income”, then, you have to declare in the same moment you receive the income, in a QUATERLY DECLARATION.

When you rent a property, you receive an “income” which is subject of the  Spanish “Income Tax”. In Spain, depending if you are “Spanish tax resident” or “Spanish non resident”.

If you are resident, then the tax is the Resident Income Tax (IRPF-“Impuesto de la Renta de las Personas Físicas”), and if you are non resident, the tax is the Non-Resident Income Tax (IRPFNR-“Impuesto de la Renta de las Personas Físicas No Residentes).

If you are “Spanish Tax resident”, then you have to declare your rental incomes in our ANNUAL TAX declaration (model 100).

But, if you are a Non-Spanish Tax Resident, then you have to declare your incomes in the Non Resident Income Tax (model 210) in the following way:

– QUATERLY:  When you are renting your property, you have the declaration of these incomes in the same quarter of the year in which they are generated. So, here in this post, we have consdiered the case in whcih rent is for “tourism” purposes, but, also, you may rent for “residential” purposes. In  both cases, you have to declare the incomes in the correspondent quarter of the yeat.

 “Residential rent”: It means, when you are renting for “residential” purposes, with medium-long term of families or individuals renting it for “living” and not for “tourism”.

– ANNUALLY: As resident, or as non tax resident, you have to make the annual declaration of taxes (IRPF /IRPFNR).  So, for the periods of time of the year where  you are non-renting the property, as non resident, there is a tax to pay, and this is declared in at the end of the following year.

An example:

You are non-resident and obtain rent for touristic property in February 2015.

1.- Quarterly declaration: You have to declare that income in the same quarter. Presentations of these declarations must be done before 20 days after the end of the quarter. In the case of the example, the incomes from rent from the quarter January-March, should be declared in the tax declarations to submit before the 20th of April 2015.

The rest of the year 2015 there is not further rent on the property.

2.- Annual Declaration: Then, before the end of the following year, 2016, you have to present the declaration of taxes, and pay for the time that the property has not been rented.

So, please, be informed that, when renting a property for touristic purposes,  together with your LEGAL obligation to register your property, you have the TAX OBLIGATION to declare the income QUARTERLY, and then, ANUALLY, for the rest of the year.

Do I have to pay VAT?: There is a big confusion in the market avoid this question. Purely, Renting incomes are not subjected to VAT.

So, if you rent your property for both, residential or touristic purposes, YOU DO NOT HAVE TO PRODUCE INVOICE, and the transaction IS NOT TAXED BY VAT.

But, this is just in case the incomes you receive are ONLY FOR RENT. But, when you offer other services similar to hotel, like:

                – Restaurant, food, breakfast

                – Cleaning inside the apartment

                – Washing towels, sheets, etc.

In these cases, you have to PRODUCE INVOICE and charge VAT on your service. The requirements will be:

                – Produce invoice to each of your guests

                – Charge VAT (10 %)

                – Declare VAT quarterly

                – Declare VAT annually

                – To register as business professional in the Tax office

                – To declare Income Tax quarterly

                – To declare Income Tax annually

B)  TAX TO PAY:

Clarified the above, we will consider now how to pay the incomes received through a holiday home.

To the net amounts received from the rent, you can reduce:

– The proportional interest (not capital) of the mortgage (or any  other type of credit used to buy the property) paid for the acquisition of the property.

– The proportional Council Tax, Garbage collection, House insurance, Community charges, etc.

– The proportional reform, maintenance, furniture, equipment, water, electric, internet, etc.

– Marketing, publicity, lawyers, etc.

An example:  

“A” has a house in the Costa Blanca, which is not being used as permanent home, and he decides to rent it through Airbnb, or any other similar platforms.

  • Declaring the rent obtained: The house is valued in 150.000 EUR, and the total rent obtained has been of 6.000 EUR in 4 months, May, June, July, August of 2015.
  1. Council Tax. Yearly is 500 EUR. So, 500/12*4 = 166,6 EUR. This is the proportional amount of Council Tax during the 4 months period in which the house was rented.
  2. Mortgage interests: “A” has paid that year 1.200 EUR of mortgage interests, so, 400 EUR corresponds to the rental period.
  3. Community charges: Yearly are 600 EUR, so, 200 EUR corresponds to the rental period.
  4. Garbage collection: 150/year. So, 50 EUR corresponds to the rental period.
  5. House insurance: 350/year. So, 33,1 EUR corresponds to the rental period.
  6. Payment of marketing fees: 300 EUR
  7. Water, electric, gas, internet: 450 EUR corresponds to the rental period.

TOTAL EXPENSES: 1.599,7 EUR. This will be the total amount that “A” may deduct from the incomes received. So:

6.000 – 1.599,7 EUR = 4.400,3 EUR

The amount of 4.400,3 EUR pays 836,057 EUR in taxes, as per the scale below:

Rate of the tax for 2016:

  • From 0 to 12.450 euros – 19%
  • From 12.451 euros to 200 – 24%
  • From 20.201 euros to 35.200 euros – 30%
  • From 35.201 euros to 60.000 euros – 37%
  • From 60.001 euros -45%

And this declaration of tax should have been done in 2 declarations, made on the proper quarter of the year 2015. In this way:

– The rent obtained in May and June, should have been declared in the quarter declaration made before the 20th of July 2015.

– The rent obtained in July and August, should have been declared in the quarter declaration made before the 20th of October 2015.

  • Declaring the rest of the year: As the house is not a permanent home, then, “A” must declare, and pay, for the rest of the year the house is empty. So, this is paid:

– In the annual declaration of Income Tax. If “A” was Spanish resident, before the end of June 2016, and if “A” was non resident, before 31.12.2016.

– Rate: Average of 0,5 % from the Catastral value.

 


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