Taxation for non-resident hosts with holiday rentals in Spain

How are holiday lettings taxed in Spain?

“Can I rent out a holiday home in Spain?” is a reasonable question to ask, to which the answer is yes, even if you don’t live there! However, if you use a holiday rental portal to rent a holiday apartment in Spain, then you will be liable to pay tax on such income. Note that you must declare any earnings you make on your holiday rental, even if you are not living in Spain or only reside in the country for part of the year. This may mean that you also have to include any income details from your rental property to HMRC in the UK as well, even if it’s just tax on Airbnb property abroad. That said, you will be given a chance to declare to the British tax authorities that you have already paid income tax on this income in Spain, of course.

Although income generated from holiday rental property is taxable for both residents and non-residents in Spain, the Spanish tax regulations treat them differently. In other words, your residency status will affect how the tax system treats you in the post-Brexit landscape. The general rate of income tax is what non-residents who live in the UK — or anywhere else outside of the European Economic Area, for that matter — is 24%. Both residents and non-residents pay Spanish income tax at this rate for their rental incomes. The difference is that non-residents pay this rate for their gross rental income. Simply put, you cannot deduct most expenses for your rental — such as mortgage interest, utility bills and maintenance costs, for example — before calculating your income tax liability.

In addition to income tax, holiday rentals are subject to value-added tax or VAT. In Spain, this is known as IVA. More widely, IVA is applied to numerous goods and services, just as VAT is applied in the UK. If you host a holiday rental in Spain, then you will need to apply IVA to the price shown on the holiday rental website, as well as anywhere else you advertise your holiday home and account for it separately. This is because any typical holiday rental will include the provision of one or more services. For example, if the rental property is cleaned prior to the arrival of guests or new linen is offered for each rental period — as is typical for the industry, of course — then the tax authorities will deem your business to be one of service provision and, therefore, subject to IVA.

Since 2023, the standard IVA rate in Spain has been 21%. For most short-term lets, owners will have to include it, regardless of their residency status. The only exceptions that might be allowed are when long-term lets have been agreed. This is because the aforementioned services typical of holiday rentals won’t necessarily be offered. If this applies to you, then seek expert advice from a tax consultant because simply deciding that IVA shouldn’t be applied on your own could land you in trouble with the Spanish tax authorities.

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Holiday rental regulations in Spain

After asking, ‘Does Spain tax non-residents?’ and finding out about non-resident taxes in Spain for holiday homes, you’ll probably want to also know about other relevant regulations covering holiday rentals. In Spain, regulations surrounding the holiday rental market are highly regionalised. Although non-resident property tax in Spain for holiday rental income is nationwide, there may be more costs to consider before you can work out all of your taxation obligations.

For example, some owners may need to register their property with the local authorities before it can be legally let. This may mean paying a fee or tax to the municipal authorities, but this doesn’t happen everywhere. Where such charges are applied, rates differ up and down the country. Furthermore, there may be limits in certain areas on the number of days per year that a property can be rented out. Once you go beyond this limit, further charges or additional tax may be levied locally.

In addition, local authorities may charge a so-called tourist tax, something that tends to be more prevalent in built-up areas and cities. Usually, holiday rentals need to charge this tax per person per night, in common with hotels. However, the rules vary from one region to the next, so you must familiarise yourself with the particular tax regulations where your holiday rental is to ensure you can comply with all of your legal obligations. Note that the same rules apply to both residents and non-residents. Below are some examples of the various tourist tax rates in Spain:

• In Catalonia, tourist tax rates range from €0.75 to €2.25, depending on the precise location and accommodation type.
• In Madrid, no tourist tax is applied per night.
• In the Balearic Islands, a fee of between €1 and €4 per night is expected to be applied to holiday rentals, depending on accommodation type, but discounts are offered for stays of eight nights or more.
• In the Canaries, you will not be expected to apply any tourist tax to rent out your property.

How do I pay Spanish tax if I rent out my holiday home?

Use Model 210 for non-resident tax declarations on holiday rental income. In fact, model 210 is the form used by all non-Spanish residents to declare income generated in the country. As such, you would use the same form for a holiday rental property as you would for any long-term let you might have.

It is worth noting that model 210 is used by Agencia Tributaria, the Spanish equivalent of HMRC, as being for Impuesto sobre la Renta de No Residentes (non-residential property income) or IRNR for short. You can search for IRNR on their website to obtain a downloadable version of Model 210 to complete your tax return. Note that IRNR declarations are made quarterly in Spain, not annually, as they are in the UK. Online submissions are accepted, so it is easy to complete the form from the UK and send it to Agencia Tributaria electronically.

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