Rental Tax

The Spanish rental law states three main kinds of rent:

• Long term rental. If the rented property is used to satisfy the permanent need of the tenant’s house.
• Short term rental. If the property is used to cover the temporal need of the tenant’s house. It will have a shorter duration that the long-term rental but longer than the touristic rental. The property will not be used by the tenant for tourism.
• Holiday lets. Every Region in Spain has stated rules about this kind of rental.

In general terms the laws regarding holiday rentals in the different Spanish Regions have stated that the landlords that wish to rent out their properties are obliged to register the properties with the “Servicio Territorial de Turismo” or the “Registro Turistico” in the area where the property is located.

Non-Resident

If you are NON-RESIDENT in Spain and you let your property in the country, then you have to pay income tax on the rent instead of the imputed tax described for the properties no rented.

You must present a quarterly declaration at the end of each quarter (April, July, October and January of the following year). In the quarterly declaration you must declare the PROFIT earned in each quarter.

If the equity of the quarter is NEGATIVE, you do not have to present the quarterly form, instead, in January of the following year you have to present an annual form including all the negative quarters.

If you let some quarters but the other part of the time the house is NON LET, you must present:

• The quarterly form for the quarters let and, separately,
• The annual form of the periods non let (so the MINIMUM tax is calculated proportionally)

Deductions: The deductible expenses include, but are not limited to, electricity, water, gas, advertising fees, home maintenance and repair expenses.

What is the tax base when a non-resident has a leased property in Spain?
In general, the taxable base will be the amount received by the lessor for all items, including, where applicable, the amount corresponding to all the assets transferred with the property and excluding Value Added Tax. No deduction whatsoever may be made from the total income thus obtained.

However, in the case of taxpayers resident in another Member State of the European Union, in relation to income obtained as from 1 January 2010, and those resident in Iceland and Norway in relation to income obtained as from 1 January 2015, they may deduct expenses for the determination of the gross tax base, provided that it is accredited that they are directly related to the income.

Due to BREXIT, the tax liability for the owners who are residing in UK has been changed:

• The rentals generated form 01/01/2021 are taxed 24% upon the gross income.
• They cannot deduct expenses on the rental income.

The tax on rental income for residents in EU, Iceland and Norway is the 19% and they can deduct expenses.

The rental income tax is the 24% for the owners of the rest of the countries.

Resident in Spain

If you are RESIDENT in Spain and you let your property in the country, then you have to pay income tax on the rent.
You need declare any income from the renting of your property in the yearly income tax return (form called 100).

The deductible expenses above listed for the Non-Resident are also applied for Resident owners renting property in the country. You can deduct for example mortgage interest, insurance, IBI, and bills like community fees.

Also, in the case of the renting of property for residential use (long rental), the positive net profit, calculated as the difference between the total gross income and the deductible expenses, will be reduced by 60%, regardless of the age of the tenant.