It is very difficult to summarise the content of an article in its title, particularly where it refers to various situations and various rights, whether from a common or general point of view or from a legal point of view.

Therefore, when in this article we say “dwelling”, this must be interpreted in a very general sense as meaning an “enclosed, covered place which has been built =building= to be inhabited by persons”. And when we say rental of dwellings, it very generally means handing over the right to use or enjoy (occupation) that building to another person, from whom a consideration will be received. And all this applies whether building refers to what we call a flat, apartment, villa, terraced house, room, studio, etc., and whether it is located in a residential building, an apartment-hotel building, a hotel or a combination thereof.

But what matters for the purposes of this article, namely to determine the taxes payable by the owner on the rent received for the cession of such a habitable building, is the kind of “dwelling” involved or, rather, the intended use of that dwelling or how it is going to be used by its occupier, whether by virtue of an agreement between the parties or because it must be legally used for a specific purpose and none other.



From a legal point of view, where the intended use of dwelling is to be ceded by a person for a price or a rent to another person, who will occupy it, normally with their family, for the essential purpose of fulfilling the need to have living accommodation, this will be what Spanish Law simply (basically) defines as the “rental of a dwelling”.


Where the dwelling (as a building) is ceded by a person to another person to fulfil the latter’s need to live in it not permanently but during a specific season, be it the summer season, the ski season, a school year during which a person will be attending college or a period during which a person has to move to certain place to do a temporary job, this is legally classified as a “rental for use other than as habitual dwelling-residence”.


In this case, whether the dwelling is a villa, a room, a studio, etc., which is part of a building or group of buildings located on land classified as (i) touristic land, or (ii) residential land whose use for tourism-related purposes is permitted, it is legally mandatory for the property to be used for tourism-related purposes, which entails an obligation to comply with two kinds of requirements, i.e. those relating to the unit itself and those relating to the “standard services of the tourism industry”.

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This relates to dwellings located on “residential land” (not, therefore, on land earmarked for tourism-related purposes) which are used all year round or during specific periods as tourist accommodation units or for purposes relating thereto.

Consequently, this type of dwelling has to be operated as a tourist accommodation unit and is therefore required to include as an important element, in addition to the cession of the right to occupy the unit, the provision of other “standard services of the tourism industry”, even if these are minimum.



1.- Each quarter of the calendar year during which such dwellings are or remain rented out, the non-resident individual lessor will have to file a tax return with the State Treasury in respect of the rents thereby obtained.

In the case of taxpayers residing in the EU or in EEA countries with which an effective exchange of information is in place, certain expenses may be deductible against the rental income (with certain limitations), such as loan interest, insurance, preservation and repair costs, I.B.I. -local rates-, agents’ commissions, legal expenses, amortisation of the building, etc.

The tax rate in this case would be 19% on the gain thus calculated for residents of the EU, Iceland and Norway, and 24% for the remaining taxpayers.

On the other hand, a small tax known as Actos Jurídicos Documentados (Documented Legal Acts -Stamp Duty-) is also payable, and its amount will depend on the length of the lease and on the rent agreed.

2.- If the dwelling is only used by the non-resident owner or is available to them all rear round, then the non-resident owner will have to pay tax on the “deemed income”, namely a tax which is not payable on any actual income but on an estimated, supposedly received income.

3.- Deposit on the Lease: This is not a tax, but there is a legal obligation for the lessor to demand from the tenant an amount equivalent to one month’s agreed rent as security for any damage which may be caused by the tenant. Such a deposit will have to be fully lodged by the lessor, within one month of the lease contract being entered into, with the Agencia de Vivienda y Rehabilitación (Housing and Rehabilitation Agency) of, in this case, the Junta de Andalucía, commonly known as AVRA for its initials. On termination of the lease, AVRA will refund the full deposit, without interest, to the lessor, and the latter shall in turn refund it to the tenant unless any damage needing to be repaired has been caused to the dwelling (but not because of failure to pay any rents).

If the lessor fails to lodge this deposit, then the lessor themselves -not the tenant- will be liable to pay surcharges ranging from 5% to 20% depending on the delay in paying the deposit after the above legal period has passed. If the deposit fails to be lodged and AVRA makes an inspection, penalties ranging from 50% to 150% of that amount can be imposed.

Important:   As these rentals are meant to fulfil a permanent need of the tenant and the tenant’s family, the tenant will be obligated to respect the full period agreed on in the contract and to pay the rent for the whole period of the lease. Even if a dwelling of this nature has been rented out for a shorter period, the tenant may in their sole discretion extend the contract for up to three years -obviously provided that they pay the agreed rent- regardless of whether the lessor wishes to extend the contract for such a period or not.


The taxes and tax obligations are fundamentally the same in the case of a dwelling for habitual use-residence and in the case of a seasonal rental of a dwelling, whether the latter is entered into for several months, for the whole year or for a longer period.

Therefore, the income actually obtained will be taxed during the rental period as described in paragraph 1 and the deemed income will be taxed in proportion to the period not being rented out as described in paragraph 2, both of SECTION I above.


The amount of the Deposit in this case is not one month’s but two months’ rent, which in many cases is preposterous, disproportionate and unfair.

A seasonal lease can certainly last several months or over one year, but it is normally taken for a short period, often 15 to 20 days, one or two months, etc.

However, it will still be necessary in that case to lodge with the AVRA a deposit amounting to two months’ rent, to the point that the deposit will sometimes have to be refunded by reason of expiry of the lease before the legal period to lodge the deposit has expired.

Also payable in this case is the ‘Stamp Duty’ which, as mentioned, is normally a small amount, although it depends on the duration of the contract and on the rent agreed.

Important: The duration of the lease with this kind of rental is that agreed on by the parties, and neither party may demand an extension thereof.


Tourist accommodation establishments are those which offer accommodation to persons wishing to stay at them, normally for a certain number of days but also during longer periods. While their name and category vary slightly, they are normally classified in Spain as hotels, apartment-hotels, holiday apartment resorts, hostels, etc.

But the essential feature of tourist accommodation establishments is that, whatever the occupation period, the client is entitled to receive the “accommodation” service as such jointly with the services inherent in the tourism industry.

This introduction is intended to be of assistance in understanding the taxation of accommodation units which are individually owned by a person. An establishment -e.g. a hotel building with multiple accommodation units (apartments, villas, rooms)- may constitute one only property as a whole, but it may also be divided into various units by executing a Deed known as ‘Horizontal Division’ so that each resulting unit becomes an “independent” property from a legal point of view and, therefore, is registered as an independent property.

This is what has come to be known commercially as a “condo-hotel”, where a person can acquire ownership of a hotel room, an apartment of the apartment-hotel or a villa or a building such as a bungalow, which are accommodation units of the hotel, the apartment-hotel, the holiday apartment resort, etc. That is, from a legal point of view these units are not “dwellings” but tourist accommodation units.

The owner can obtain a rent from their accommodation unit in such tourist establishments, although they may under no circumstance do so directly by renting out or otherwise ceding the apartment to a third party, nor are they entitled, as owner, to simply occupy the unit.

A person who buys an accommodation unit which is part of a tourist establishment is not really a “consumer” but an “investor or business operator”.

What, then, can the owner of such an accommodation unit do?

The only thing they can do according to Law is to cede the unit to the hotel’s sole operating company, and the latter will pay the owner an agreed rent which will then de subject to tax on the profit thereby made in the form explained below.

When we say that the “accommodation unit” has to be fully ceded for each and every day of the year to the operating company, we say it because, according to Spanish Law, only one company is entitled to provide services to and operate the hotel or any other kind of tourist establishment.

This means that the sole operating company is the only company which can handle reservations for the units, accept guests, provide services to the latter and charge them a price for doing all this.

We must therefore reiterate that the owner of the accommodation unit may not admit anybody to occupy the unit and neither they nor their family may occupy the unit other than as guests who reserve, make a contract and pay the price charged for the occupation of that same unit. To give a graphic explanation: they will have to register as hotel guests, take the keys from the hotel receptionist and pay the unit price.

The consideration received by the owner of the unit is the rent they must receive from the sole operating company of the resort.

But the reader will have probably seen offers to purchase one of these units saying that they can “occupy their own unit for two or three months without paying anything and the operating company will pay them the agreed rent for the rest of the year”.

However, this not true from a legal or a taxation point of view, because the owner may occupy the unit as a guest for the maximum period allowed by Law “where the guest is also the owner” (not more than two months in the case of Andalucía) and they will also have to pay a rent, event it this is done by way of an offset payment.

Having made this long but necessary introduction, we must now go back to the purpose of this article, namely to know the taxes to be paid initially by a person who buys an “accommodation unit” and the taxes they will have to pay for using it personally during a certain period and, also, for obtaining a rent from the operating company in charge of marketing the unit.

1.- Taxes inherent in acquiring ownership of the “tourist accommodation unit”.

1.1.- IVA (VAT) is applicable in all of Spain except the Canary Islands, where this is replaced by a very similar tax albeit with much lower taxation rates.

The 21% I.V.A. payable on the selling price must be passed on by the seller of a tourist accommodation unit to the purchaser.

It is true, on the other hand, that as the purchaser does not purchase the unit for their personal use, they can apply for a refund of this I.V.A. the following year.

1.2.- Impuesto de Actos Jurídicos Documentados (Stamp Duty), the applicable rate of which depends on the part of Spain where the property is located and normally ranges from 0.75% to 2% (1.5% in Andalucía).

2.- Taxes inherent in the rental or other legal form of cession of the unit to the “sole operating company” against a consideration or, where applicable, to be offset in subsequent years.

2.1.- As the owner of the tourist accommodation unit cedes the unit, by virtue of a legal obligation, to the sole operator for the whole year, they must receive the rent agreed on with the operating company.

Such a rent received by a non-resident is subject to Income Tax at the rate of 19% in the case of taxpayers with residence in the European Union, Norway and Iceland and 24% for the remaining taxpayers. This tax must be filed and paid quarterly.

Normally, the payer of tax on the yield -operator- must make a withholding on account of the Non-Residents Income Tax (19% for residents on the EU and the EEA and 24% for the rest).

2.2.- On the other hand, the owner-lesser must pass on to the operating company I.V.A. at the general rate (21%) and they must file a VAT tax return -also quarterly-.

3.- Fiscal implications of occupation or use of the unit by its owner.

We mentioned earlier that the owner is not entitled to occupy the unit due to their holding title to the property as the owner thereof, as they have previously rented out or ceded the unit for “the whole year” to the operating company (article 42.2.2 LTA – Tourism Act of Andalucía -).

It is true, however, that the owner may occupy and use the unit during “not more than two months” (in the region of Andalucía, as per article 42.3.a LTA) as a guest, which entails an obligation on their part to pay the price of their stay, as any other guest, including in this case the obligation to add 10% I.V.A. as would be the case with any other guest. This I.V.A. is unrecoverable given that the owner is not in this case performing a professional or trading activity but merely acting as a consumer or user (guest).

But “payment” or “income” must not be confused with a transfer of money in one or other direction. It is possible, and very often the case, that the operating company which must pay an annual rent and I.V.A. to the owner for the cession of the unit during the whole year will only transfer to the owner the amount of the rent plus I.V.A. thereon albeit withholding the sum payable by the owner-guest for the time they have personally used the unit by way of an offset payment.

What happens if the tourist accommodation unit (often an apartment, bungalow or small villa) is used or occupied by, and available to, the owner of the unit during the whole year?

In this case, both the owner of the unit and the hotel operating company will be breaching very important rules relating to town planning, tourism and taxation. By way of an example:

1.- The operator of the tourist accommodation establishment may receive severe economic sanctions and the whole establishment may even be closed down.

2.- If no tax is paid on the cession -necessarily granted for valuable consideration- of the unit by the owner to the operating company and, inversely, if the hotel cedes a period of time (even on a de facto basis) for the owner to use gratuitously where a price should have been paid, both the operating company and the owner will be thereby failing to comply with their fiscal obligations.

3.- Finally, if the owner of the tourist accommodation unit lives in the unit or the unit remains available to the owner, it may well be considered that their unit has been transformed into a personal residence, which is a very serious breach of town planning regulations which may even result in the closure of the building. This is of the utmost importance, and the ‘Autonomous Communities’ (Regions) of Spain are going to great lengths in establishing legal regulations to crack down on the de facto conversion of tourist accommodation units into “residential homes”.


HIPOTECA In another article published in this same blog , we commented on the new regulations affecting private dwellings which, either permanently or during certain periods of the year only, were occupied by third parties against payment of a price and including the provision of some tourism-related services such as daily cleaning, meals, etc.

Such use of these dwellings (apartments, villas, etc.) located on residential land is regarded as a tourist services operation by reason of their including such ancillary services and, therefore, they must be registered with the Tourism Registry.

The operation of these dwellings for tourism-related purposes is certainly quite similar to the “seasonal rental” described in Section II above.

The taxation of the -actual or deemed- rents thereby obtained is as follows:

1.- If the property is operated all year round for tourism-related purposes, i.e. as tourist accommodation, then Income Tax will be payable by individuals residing in the EU, Norway and Iceland at the rate of 19% on the profit thereby obtained. The general rate for the remaining taxpayers will be 24%.

As this is a tourist accommodation activity, the owner must charge I.V.A. to the user at the reduced 10% rate which applies to the Tourism Industry.

In both cases, quarterly tax returns need to be filed in respect of these taxes.

2.- If the dwelling is only operated for tourism-related purposes during part of the year, the taxation (Income Tax on actual rent and I.V.A.) will be the same as that described in 1 above in proportion to the period of time during which the property has been used for such purpose.

As regards the periods during which the dwelling is not being operated, namely when it is being used by its owner, the only tax to be paid will be the tax we have referred to as “deemed income tax” (See Sections 1 and 2).

The above list of taxes is obviously a generalisation and will need to be specifically determined in each particular case.

This is an opinion article and is therefore subject to any better-founded opinion on the matter.

Francisco J. Lizarza – Lawyer

Rocio Lizarza – MBA