It seems pretty much a no-brainer doesn’t it? You have a house, villa, apartment, annex or whatever, that is standing empty for the most of the year and there are tourists who are looking for accommodation. Yes, a slice of that particular pie seems very appealing. So, you spruce it up, take photos, stick it on one of the many holiday rental advertising sites and then you wait for the money to start rolling in…
Oh, if only it were so simple! If you are renting out a property or thinking of doing so and you don’t do things correctly – you could be setting yourself up for a hefty fine, not to mention tax investigations that can go back for years!
In November 2011 Catalonia introduced a new category of tourist accommodation called “Habitatge d’us Turistic” or “home for tourist use” which is an attempt to regulate the 1000’s of holiday rentals that previously had no official category or control. Initially, the requirement was to apply (and pay) for a licence from the local Town Hall but a further law in Dec 2012 specified that owners simply had to communicate to the Town Hall their intent to rent a property. The Town Hall is then obliged to forward the information to Catalonia Tourism who will register the property and assign it a Tourism number.
There are some basic requirements to register as an Habitatge d’us Turistic but there are 2 main things that would prohibit a registration:
1. The property has to have a Cedula de Habitabilidad, which rules out many rural properties which have been converted from agricultural buildings and do not possess this “Occupancy certificate.”
2. If your apartment or villa should be part of an urbanisation where the community rules or by-laws state that you may not rent your property as a holiday rental.
The rest of the requirements are pretty straightforward and cover things such as being well maintained, sufficiently furnished and equipped and providing contact numbers etc for the clients. You also have to have official complaint forms available, which are issued by the Generalitat de Catalunya.
Of course, being officially “in the system” brings with it a raft of other responsibilities like paying taxes on any profits!
If you are resident in Spain (which generally, you are by default if you live here for more than 26 weeks a year) this means that (if you are not already) you will have to become…..
Autonomo – or “self -employed” .. If you are renting out your property for profit it means you have a business. If you have a business then you will need to register as Autonomo and pay Social Security contributions. There are few grey areas with the Autonomo system in Spain –if you are earning regular money from an activity and especially if you advertise your service – you will be deemed to be “in business” and be classed as self-employed. And it is costly for low earners. Currently my Autonomo payment is €276.82 per month. What? Yes, you heard me correctly. I said €276.82 per month or €3321.84 per year which is paid regardless of earnings. Yes, it sucks. Personally, I believe that the high level of Autonomo payments for “one-man band” businesses is, in one swoop, responsible for inhibiting small enterprise and encouraging “black money”. But my opinion, or yours for that matter, is not the issue. The law is the law. The system is the system. Not liking the Spanish Autonomo System does not get you off the hook!
Personal Income Tax – Obviously, if you are in business you are obliged to pay your taxes. For the model of Autonomo that fits our rental business we have to submit our accounts every 3 months. Yes, you can do it yourself but with the complexity of tax laws and the added difficulty of understanding them in Spanish, we have always considered it wiser to use a “gestor” . That is another €470 per year in addition to whatever we pay in personal income tax.
IVA (Spanish VAT) – All holiday rentals are subject to IVA which is paid at the lower rate of 10%. There is no IVA threshold for businesses such as there is for VAT in the UK. IVA has to be paid on the first Euro you take. So, you have to charge this on top of your rental tariff or absorb it in the quoted price. Either way, you have to show it on your invoices and in your accounts.
Tourist Tax – In addition to IVA the newest administrative burden is that all tourists staying in any type of lodging in Catalonia are subject to Tourist Tax. For vacation rentals in Barcelona this is €0.65 per person per night. For the rest of Catalonia it is €0.45 pppn. It is payable on the first 7 nights only. But guess what – you have to add 10% IVA and show it separately on an invoice. Oh – and under 16’s are exempt but to prove it you have to submit a copy of their ID or Passport with your accounts. I’m not making this up… For more information about Tourist Tax see the FAQs on the Gencat website.
Registering Clients with Catalonia Police – If you have any kind of lodging for tourists – be it Hotel, Pension, B&B, Casa Rural, Rental-home, or Caravan/camping site; by law you have to register each person -name/address/passport number/passport issue date/date of birth/length of stay – with the Mossos d’Esquadra within 24 hours of their arrival. And there is a fine for non-compliance.
If you are already renting and not complying with any of the above, you may want to re-evaluate your position. One of the reasons that the new category was introduced is to try to regulate the private rental sector and to root out the illegals with potential fines of €30,000 or more for those that do not comply. Also the law states that owners and agents are “jointly and severally liable for breaches of obligations”. So no passing the buck to your agent or vice versa.
Last June, on the GenCat website (see para 4 on that link) it stated that the Government had launched a campaign to control the numbers of illegal rentals and was searching internet advertising sites in order to identify them. Interestingly, only a few weeks ago I heard about an advertising site that had been contacted by a government department requesting details of its advertisers. The wheels are turning. Don’t be caught out!
For more information about how to legally rent your home to tourists see the FAQ section on the Gencat website. You can also read the Law for yourself here at Articles 66 -72: Decree 159/2012 Homes for Tourist Use . If you don’t understand Catalan, running it through Google translate will give you a basic idea.
Disclaimer: This is the situation as we understand it after our own experience over the last few years. If you are in any doubt about your own situation, we suggest you seek legal advice.