Spain Explained

Spanish tax on rental income: rates, deadlines and recommendations

British nationals are by far the largest group of foreign homeowners in Spain. Many keep their property as a holiday home or only live there part time, either renting their property to other holiday makers or long term tenants for some of the year. For many, this is a valuable source of income. However, as most are well aware, this income is taxable. Subsequently, our clients often ask us about tax on rental income if they’re not resident in Spain. Sure enough, have to pay tax somewhere, but should it be your country of residence or Spain? Or are you expected to pay in both? In this article, we answer your questions about paying tax on rental income.

We would like to remind you that taxation in Spain can be complicated and you could be subject to fines or penalties if you miss a deadline or don’t do your taxes properly. Advisably, you should seek fiscal advice from an expert to avoid possible complications.

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Spanish tax on rental income

Primarily, it is important to know that you have to pay tax on rental income in Spain even if you’re not a resident. The Spanish Tax Authority collects taxes on rental income quarterly, on the following dates:

  • First quarter, 20th April (January, February, March)
  • Second quarter, 20th July (April, May, June)
  • Third quarter, 20th October (July, August, September)
  • Fourth quarter, 20th January (October, November, December)

However, there are allowances for some expenses. These include a proportional part of the house insurance, IBI, the community fee, property repairs, cleaning, property management fees, and water and electricity if paid by the house owner. You can even claim expenses against mortgage interest and the lawyers fees for the completion of your tax return. 

When you lease your property and pay tax on the income, adjustments are made to the calculation according to regular non-resident tax. The amount of this tax is then based only on the number of days the property was unoccupied by tenants. However, it is important to note that you can only claim expenses against rental income if you are a resident of the EU, Norway or Iceland. 

The British/Spanish dual taxation agreement

However, British homeowners will be relieved to hear that Spain and the UK have a dual taxation agreement. This means that you are not required to pay tax on the income in both countries. Although you have to declare your income in the country within which you are tax resident, you don’t have to pay twice. Instead, the tax you have already paid in Spain is deductible as double taxation. 

Spanish tax on rental income: Rates

The Spanish government introduced changes to the amount of tax that non-residents have to pay from the 1st of January 2016. The changes that non-residents should be aware of include:

  • For the year 2017, the Spanish rental income tax remains at 19% for those non-residents who are tax resident in a country within the European Union, Norway and Iceland and 24% for tax residents outside these areas.
  • A lowering of non-resident income tax for the period 2016 from 19.5% to 19% for those non-residents who are tax resident in a country within the European Union, Norway and Iceland and 24% for tax residents outside these areas.

It is important to note that the amount of Spanish tax on rental income you pay as a non-resident is dependent on the country in which you are currently fiscal resident and not your nationality. There have been cases, for example, where British nationals have moved to a country outside the EEC. Consequently, their Spanish property is subject to heavier taxes. Furthermore, it is essential to keep abreast of developments regarding Brexit. To ensure you have a clear understanding of the potential changes, contact your solicitor.


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Rent out your home with confidence

Letting out your property in Spain is a good option for many British homeowners. Not only does it provide a good source of steady income, it also helps maintain their home while they’re abroad. However, do make sure you are prepared for the tax implications. Otherwise, you could be vulnerable to fines or interest payments from the Spanish Tax Authority. To ensure you’re fully compliant, seek the advice of an independent tax adviser. At Ábaco Advisers, we can help you make sure both your Spanish and British tax returns are fully in order – so you can let your home with confidence.

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69 comments

Mark Scales

14 March, 2018 10:13 am

Hello
Hello
I own an apartment on the island of Tenerife. The property is let out for most of the year. Currently i pay no rental income tax. I had a meeting with my Spanish accountant this week & he explained about a new law that was passed last year stating i need to pay 19% tax on profits only, also i need to register each guests details and upload to the police and keep the records for 3 years
Can you please provide any additional advice?
Thank you

Suzanne O'Connell

14 March, 2018 1:38 pm

Registrations do change from

Registrations do change from place to place. However, there has always been a requirement to pay income tax on rentals every quarter. It is 19% for EEC residents with allowances for costs and 24% with no allowances for non EEC residents. 

Karen dodson

10 April, 2018 10:17 am

Hi,
Hi,
We rent out our property long term (first time in 12 years) we still have a mortgage and we charge 600 per month. Can we claim all of the interest. All of expenditure I.e washing machine if faulty: I I etc or do we only get a percentage off these expenses.
Thanks

Suzanne O'Connell

12 April, 2018 1:26 pm

Hi Karen

Hi Karen

The examples of costs that can be deducted by landlords who are resident within the EEC and the European Economic Area for the period the property is rented ar:

– council tax

– community charge

– utilities (if not paid by the tenant)

– house insurance

– mortgage interest

– cleaning and laundry

 

Dennis

30 April, 2018 11:13 am

Hi, my wife and I bought an
Hi, my wife and I bought an apartment in Spain. We do rent it out for some period and we have also paid rental tax. As we understand, we also have to pay the imputed income tax. Since it is just my name that registered with Airbnb and on the invoices, my Spanish advisor just send in Modelo 210 for me. Since we both are registered as owners of the apartment, does my wife not need to send in Modelo 210?

Suzanne O'Connell

2 May, 2018 12:47 pm

Hi Dennis

Hi Dennis

As the property is in both names you both have to declare the rental tax as well as the normal non-resident taxes for the days that your property isn't rented out. 

Marina

31 May, 2018 7:50 pm

Hello
Hello
We have an appartment in Spain and rented it out to a travel company for their staff. We would like to ask, do we need to pay rental tax by ourselves or does the company has to pay that tax. If it is a case has this company give to us any documental prove?

Suzanne O'Connell

5 June, 2018 1:47 pm

Hi Marina

Hi Marina

As you receive the money you will responsible for paying the tax

Katie Bunce

19 June, 2018 4:47 am

Can you declare rental income
Can you declare rental income without having registered the property as a tourist let?The reason I ask is because I have a few bookings for this year which I will honour but have decided that I’ll no longer let thereafter.Therefore I don’t want to apply for a licence which I won’t need or use in the future but I do want to settle my tax liability.Thanks for your advice.

Suzanne O'Connell

9 July, 2018 4:36 pm

Hi Katie

Hi Katie

You have to declare your income but you also have to register 

David Anthony

29 June, 2018 2:48 pm

Hello. I am just about to
Hello. I am just about to complete my first tax return on rental income and I have a question on when do you declare income received: Is it in the quarter that you receive the income or in the quarter that the rental actually takes place? Also, if it is in the quarter that you receive it and the rental takes place in a subsequent quarter then how do you deduct expenses associated with that rental such as laundry, property management?

Suzanne O'Connell

9 July, 2018 4:35 pm

Hi David

Hi David

The tax has to be declared in the quarter it corresponds to, not when you receive the money. The same applies to costs

Jeanne Curry

4 July, 2018 6:38 am

Is there an app to use to
Is there an app to use to send a copy if the passports to the Gaurdia?

Can I do this or must it be done by an agent or can I do this if I rent out the property privately?

Suzanne O'Connell

9 July, 2018 4:32 pm

Hi Jeanne

Hi Jeanne

No, there isn't an App that can be used to send a copy of your passport but there might be one to use to send those of your tenants. 

David Anthony

11 July, 2018 6:22 am

Hi – For tourists rentals, do
Hi – For tourists rentals, do you have to book income within the quarter that you receive it or within the quarter that the rental related to that income takes places? Kind Regards

Suzanne O'Connell

18 July, 2018 7:38 am

Hi David

Hi David

The income is declared in the quarter when the tenant occupies the house. 

JACEK

6 August, 2018 10:23 am

Hello, my question is what is
Hello, my question is what is counted for tax purposes as an income if I rent via agency. Is it amount what customer paid to agency or is it an amount agency transfer to my account? In first case does cost of agency is deductable?

Suzanne O'Connell

8 August, 2018 8:54 am

Hi

Hi

The full amount is declared then the agency charge is a deduction but only for residents within the EEC. 

Judy

18 September, 2018 9:54 am

Hi my husband and I own a
Hi my husband and I own a property in Marbella and an agent has helped let out the property in July and August this year. The agent withheld 24% of the total rent (as we reside outside EU) and will be paying them directly to the tax department. Please can you let us know if we still need to submit a form 210 for the same quarter to tge tax department from our side?

Many thanks,

Judy

Suzanne O'Connell

21 September, 2018 1:02 pm

Hi Judy

Hi Judy

I'm not sure why they have withheld 24%. I can only assume that the agent is presenting the 210 directly to the tax office on your behalf. 

Robin knox

13 October, 2018 5:02 pm

Given that rental income is
Given that rental income is general during the July to September period and expenses like community charges are spread across the year are you allowed to lump such charges into that quarter?

Suzanne O'Connell

19 October, 2018 1:55 pm

Hi Robin,

Hi Robin,

No, you're not. The costs are for the number of days of occupancy that the tenant had the use of the services. The rest of the time it was for your use. 

Marc

20 October, 2018 9:30 am

Hi, my question is what is
Hi, my question is what is counted as taxable base when I rent online via Booking or Airbnb platforms.
For example, the guests have payed 1000eur in total while making the reservation through the platform. Out of that amount, Booking platform automatically took 150eur in commissions and transferred to my account remaining 850eur. The platform sends me one invoice showing the total amount paid to me (1000eur) and the other invoice for the commission paid to them (150eur). So, what is my taxable base, 1000 or 850 eur? Does this differ if I am an EU or non-EU tax resident?

Suzanne O'Connell

24 October, 2018 1:08 pm

Hi Marc

Hi Marc

The base for the tax is is the gross income i.e. 1,000€ then for EU residents you can deduct the agent's fee. Non-EU residents cannot. This is based on where you fiscally reside not nationality. You can be British but live in Hong Kong and there is no allowance. A Russian fiscal resident in France is allowed allowances.

Petra

5 November, 2018 5:47 pm

I am a individual apartment
I am a individual apartment owner with rental licence. I had a guest asking me to issue him an Invoice, so that he could get a tax return in his country. His payment came through Airbnb and no cash was involved. Should I issue him an invoice since we do not charge VAT and I am not registered as company but individual owner?
Please confirm if residential rent income is exempt from VAT (IVA) for individual apartment owners in Spain?

Karen Britton

23 December, 2018 12:07 pm

Hi,
Hi,
My property is being rented by the management company as their office. They deduct money for tax from the gross rental (about 16-17%) before transferring the net rental value to me.
Is this correct?
What proof should I ask from the company to show they are paying this tax% to the government?
Is there tax that I need to pay to the government over and above the amount the company is already withholding?
Would appreciate any help, thanks!

Suzanne O'Connell

28 December, 2018 1:10 pm

Hi Karen

Hi Karen

This is a commercial rental and the landlord has to register as such and give the company VAT receipts etc. so they will need to obtain the assistance of a Gestoria for the quarter VAT declarations 

Karen Britton

20 February, 2019 2:38 pm

Hi Suzanne,
Hi Suzanne,

Thank you for your feedback. it look like I have to pay both VAT (21%) and property rental tax (19%). The tenants (company renting the property) retain the 19% and pay direct to the government & i have to submit 1/4ly returns paying the 21% VAT (IVA tax)

Ste

3 January, 2019 8:16 am

Hi, for the last 3 years I
Hi, for the last 3 years I have declared my rental income for my property in Spain, to my accountant and have paid the uk tax due on it, he has always said this is correct? I am beginning to doubt his judgement now. If he is wrong what would the situation be regarding tax paid in th UK?

Suzanne O'Connell

8 January, 2019 9:52 am

Hi Ste

Hi Ste

Under the double taxation treaty, as the property is located in Spain, you pay the taxes in Spain and then you have to declare in your own country and they allow for the deduction of the tax paid here against any tax due there. 

Chris Mitchell

9 January, 2019 9:21 pm

My Fiscal representative
My Fiscal representative advises that to calculate our tax due on rental income they require copies of the passports of all guests who rented the property as well as total income. I don’t have copies of passports and why are these required to calculate income tax?
As I am not resident in the U.K. And reside in Jersey which is part of Great Britain but not EU does this mean I am not entitled to any allowances to offset against income?

Suzanne O'Connell

15 January, 2019 1:16 pm

In the Channel islands there

In the Channel islands there is no allowance for costs. We assume that the passports are required to register the guests with the police when they enter the property.

Jerry Ryan

17 February, 2019 2:14 pm

I have a brand new build
I have a brand new build apartment that I need to fully furnish before renting it out (furniture / electrical items / bedding etc). Can I offset these costs against the tax payable through rentals?

Suzanne O'Connell

18 February, 2019 2:12 pm

Hi Jerry

I’m afraid not. 

Hi Jerry

I'm afraid not. 

cathie webbers

13 May, 2019 1:47 pm

I am living in the USA and
I am living in the USA and have bought apartment in Spain, Alicante. I am going to rent it on AIRbnb. My question is, will I pay taxes with 24% or 19% on myrental income. Are expenses allowed for me?

Thank you!

Suzanne O'Connell

24 May, 2019 1:30 pm

Hi Cathie

Hi Cathie

The tax will be 24% on the gross income with no allowances. 

Nicola Bromley

31 July, 2019 1:57 pm

Hello. My ex partner and I
Hello. My ex partner and I own an apartment in Spain. We rent it out for the summer months. We have declared the rental income as part of our tax returns in the UK but we have never declared anything in Spain. I’m really confused as another friend has said this is definitely not right and illegal. Could you give me any advice? Thank you

Suzanne O'Connell

3 August, 2019 10:07 pm

Hi Nicola

Hi Nicola

According to the Double Taxation treaty the tax should be paid in the country where it is located, in this case in Spain. It should then be declared in their country of residence and the tax paid here is deducted for the liability there. 

Lena

5 August, 2019 2:29 pm

Hello,
Hello,
I didn’t know, that I have to pay taxes on my rental income in Spain, I thought I have to pay it in Germany, where I’m tax resident. So, I only now found it out, after 7 months of renting out an apartment that I just bought in December last year.I’m in shock. 19% is a lot.
I have a huge amount of costs coming with the buying procedures, like the renovation and furniture and washung mashine etc. The problem is, as I did the renovation with a friend, I didn’t keep the bills. Also, I also bought thing like air condition, washing mashine, fridge etc on Wallapop and don’t have the bills.
Now, what can I do without the bills?

Also, is it just the interest that I can deduct from the rent or also other costs from the purchase process? How about the 10% taxes that I payed already with the purchase? And the agency fees of 3600 Euro? I payed them 27 of December 2018.

Also, where do I go to make that all? And how much does an agent charge for that work?

Thank you very much in advance!

Lena

Suzanne O'Connell

8 August, 2019 7:09 pm

Hi Lena

Hi Lena

When a property is rented out by a Non Resident, they should declare the rental income on form 210, every quarter. For residents renting a second property the income is declared in the annual Income Tax declaration. 

  • 1st Quarter: January-February-March – Presented to the Tax Office before 15th April
  • 2nd Quarter: April-May-June – Presented to the Tax Office before 15th July
  • 3rd Quarter: July-August-September – Presented to the Tax Office before 15th th October
  • 4th Quarter: October-November-December – Presented to the Tax Office before 15th January

Therefore for example the voluntary period for the presentation of the 2nd Quarter Rental Tax is until the 15th July 2019, covering the period April-May-June 2019.The rate for the Tax is 19% in 2016 for residents within the EEC and European Economic Area and 24%on the Gross Income for residents outside these areas. However Residents of the EU community and as of 2015 Residents in the European Economic Area, can deduct certain costs incurred and that correspond directly to the rental income received and the period the property was rented. In both cases there are also some adjustments in the Property Owners' Imputed Income Tax for the period of time the property was rented in the annual tax return presented corresponding to that fiscal year. 

The examples of costs that can be deducted, by landlords who are residents within the EEC and the European Economic Area, for the period of time the property is rented are:

  • Council Tax
  • Community Charge
  • Utilities
  • House Insurance
  • Mortgage Interest
  • Cleaning and Laundry

You can not deduct the purchase costs, or any of the other costs mentioned in your email. Under the Double Taxation treaty as the property is here you pay the tax here and this is deducted form the tax in Germany

Lena

8 August, 2019 8:35 am

Hello,
Hello,

wow, I’m so shocked right now. Nobody I know pays those paxes. I never heard of them. I bought an apartment last december and renting it now out. Where do I go to pay those taxes? And I pay a mortgage to the bank, so almost of that income goes directly to the bank. Do I still have to pay taxes even though there is nothing left from that income?
And I read, I can deduct some costs from the income. Can I deduct the agency costs (3600 euros), or the 10% taxes I paid already just for the purchasing of the apartment? And how about the life insurance that I had to pay in order to get the mortgage (6000 Euro)? And all the fees to the registration and gestor etc? The problem is all that happened in December last year and I started renting it out in Februar this year.

I really would appreciate you answer! Thanks

Lena Edich

Max

27 December, 2019 11:47 am

If I am a UK tax resident but rent out a property in the EU, do I pay tax in the UK on the profit of the rent only, or on the full amount. For example, if I have a mortgage of £1000 a month on the property and rented it out for £1400, do I pay tax in the UK on £1400 or on £400?

Thanks

Max

Oscar Paoli

31 December, 2019 12:44 pm

Hi Max,

Unfortunately we are not specialists in completing British Tax Declarations, we would recommend to have a British Accountant to do this for you.

With kind regards,

Ábaco Advisers

Juan

29 December, 2019 2:19 pm

Dear Miriam Amat,

I am a UK resident with a property in Spain rented out all year long.
I complete the 210 model for Spanish Tax Authority. Because all the expense allowances that I can apply I have to pay nothing (quote 0) because I compensate all the incomes with the expenses.
My doubt is how to complete my self assessment in UK (foreign pages). The question is that I can not say that I paid any quantity in Spain because the quote is 0. Then, should I paid 40% (I earn more than £50,000 a year) of my total income (only deducting £1,000 allowance)?. If this is the case I can not get any benefit from my deductible expenses in Spain.
Could you please help me with this? Please let me know the fee for your answer.

Kind regards

Oscar Paoli

31 December, 2019 12:42 pm

Hi,

Unfortunately we are not specialists in completing British Tax Declarations, we would recommend to have a British Accountant to do this for you.

With kind regards,

Ábaco Advisers

Anna

15 January, 2020 5:25 pm

We own a holiday home in Spain which we holiday let and pay our taxes every quarter and our annual non residents tax.

We have only just realised that as a result of brexit, as brits we will no longer be part of the EU so will no longer be able to offset our expenses against tax and so will now have to pay 24% on all gross earned income, which makes renting the property out completely pointless once you have covered cleaning costs, guardia registration, license fees etc.

We had thought as my husband has dual nationality (german) we could change his NIE to his German passport so we could offset at least 50% of the costs but from your responses below, am I right in saying that even if we was German, the fact that he lives and works in the UK means after brexit he/we would still be liable for the 24% tax?

If so I think there are going to be a lot of Brits in for a shock!!

Any advice you can give would be appreciated.

Many thanks

Anna

Oscar Paoli

15 January, 2020 5:54 pm

Hi Anna,

Unfortunately as you mention, even if you changed the passport, what rules is where you are tax resident and not nationality.

Sorry for the possible inconvenience.

With kind regards,

Ábaco Advisers

Clive Thomas

4 March, 2020 4:53 pm

I have a question.
If I rent out an apartment in Tenerife (Spain), and declare all earnings on my UK tax return and pay any tax that is due, do I then have to pay any tax in Spain?

Oscar Paoli

26 March, 2020 10:24 pm

Hi Clive,
On rental income as the property is located in Spain and under the Double Taxation Treaty, the Income has to be declared in Spain and the Tax paid here you must also declare it in your own Country and the Tax paid here is deducted from any liability there.
Kind regards,
Ábaco Advisers

JACQUI

29 April, 2020 7:09 pm

What happens if you have taken Spanish residency and have property rented out in Uk please

Oscar Paoli

30 April, 2020 8:58 am

Hi Jacqui,
In this case and Under the double Taxation treaty, as the property is located in the UNited Kingdom you must declare the income there as a Non Resident Landlord, and as a Resident here paying Taxes on your worldwide income you have also to declare the income here and any Tax paid on this income in the United Kingdom is deducted under the section Double Taxation.
Stay safe.
Best regards,
Ábaco Advisers

Nora

1 May, 2020 10:21 am

Hi
Could you advise me if I am allowed to receive part of the rental income in cash and how much? Is this subject to tax.

Thanks in advance for your assistance.

Regards

Oscar Paoli

2 May, 2020 7:44 pm

Hi Nora,
On the rental income you have to pay Tax based on the gross amount even if part is paid in cash.
Best wishes,
Ábaco Advisers

Jaques

28 May, 2020 7:56 pm

I hear after Brexit people who own holiday homes in Spain will have to pay tax on their income earned in the uk as well as paying UK tax, is that right?

Oscar Paoli

29 May, 2020 8:09 am

Hi Jaques,

The regulations are not changing after BREXIT, the only difference is that the Tax paid for Non Residents who own property in Spain will be 24% instead of 19%. On Rental Income then this will change from 19% to 24% with no deduction for costs, you have also always had to pay this Tax in Spain and also declared the Income in the United Kingdom and deduct the Tax paid here from any liability there under the Double Taxation Treaty.

With kind regards,

Ábaco Advisers

Jean Weber

3 June, 2020 4:54 pm

I want to know if I can claim for laundry fees on a property that I rent for short term lets.

Oscar Paoli

4 June, 2020 10:53 pm

Hi Jean,
As long as it is an official invoice and you are a resident in a European country you should not have any problems with doing so.
With best regards,
Ábaco Adviser

Jason hook

19 June, 2020 6:16 pm

Hi,
Could you explain the process for paying rental taxes for a Spanish resident?

Do I still have to pay quarterly?

As this is my sole income is part of it offset against my tax free income allowance?

As the house is in joint names can the rental income be split 50/50 so we can both take advantage for our tax free income allowances?

Many thanks

Oscar Paoli

23 June, 2020 2:29 pm

Hi Jason,
When you become a resident depending on how the rental has been set up you declare the income in the annual Income Tax declaration and not quarterly, if the house is in joint names then 50% each is declared.
Hope this information has been useful.
With kind regards,
Ábaco Advisers

kate jackson

24 June, 2020 1:01 pm

Hello

can I claim the cleaning and laundry on my rental property as an expense againast tax if I do the cleaning and laundry myself? Or do I have to have an invoice?

thanks

kate

Oscar Paoli

24 June, 2020 11:13 pm

Hi Kate,

You need an official invoice.

With kind regards,

john dobbs

6 August, 2020 6:39 am

Hello,

If I’m tax resident in spain and have a property in the uk which earns 50k per year (this is the only salary i have anywhere). I will pay the tax for that at around 20% in the UK (as a non resident there), am I correct in saying that because of the dual tax agreement, I will not have to pay further tax on that income in Spain? Or will I be further taxed on it?

Thanks

Oscar Paoli

10 August, 2020 8:12 am

Hi John,
As the property is situated in the United Kingdom you will have to pay Tax on the Income there but as you are a Resident in Spain the Income also has to be declared here under the regulation that you pay Tax based on your world wide income, however under the double Taxation Treaty the Tax paid there can be deducted from any Liability here.
With kind regards,
Ábaco Advisers

Marie Harrison

9 August, 2020 2:29 pm

Hi, can you advise of fees involved for completing Spanish tax forms. I am a non resident and the solicitor who dealt with the purchase of my property currently deals with all tax issues bit very few expensrs are taken into consideration. Thank you.

Oscar Paoli

12 August, 2020 8:45 am

When a property is rented out by a Non Resident, they should declare the rental income on form 210, every quarter. For residents renting a second property the Income is declared in their annual Income Tax declaration.

The rate for the Tax is 19% for residents within the EEC and European Economic Area and 24% on the Gross Income for residents outside these areas, however Residents of the EU community and as of 2017 Residents in the European Economic Area, can deduct certain costs incurred and that correspond directly to the rental income received and the period the property was rented, in both cases there are also some adjustments in the Property Owners’ Imputed Income Tax for the period of time the property was rented in the annual Tax Return presented corresponding to that Fiscal Year.

The examples of costs that can be deducted, by Landlords who are residents within the EEC and the European Economic Area, for the period of time the property is rented are:

• Council Tax
• Community Charge
• Utilities
• House Insurance
• Mortgage Interest
• Legal Costs
• Cleaning and Laundry

The information required each period is the names of the tenants, dates of occupancy, the amount paid and the costs incurred (Only for Landlords who are residents within the EEC). It is very important that you forward copies of the costs incurred. Along with the attached document to complete giving the information required to calculate the Tax.

For Non-residents in Spain we charge 149 € per year (VAT included), and for every additional property, including garages and storerooms, a charge of 24€ will be made. Regarding the quarterly rental tax declarations we charge 50 € per quarter.

Hope this information is useful.

Let us know should you need anything else.

With kind regards,

Mike

26 September, 2020 4:57 pm

Hi, If we receive a rental booking payment in 2020 for a booking that will happen in 2021, do we pay tax on this first payment in 2020 or after the rental happens in 2021, (when we will have also received the final payment)? We had heard we have to pay tax on all income by the end of the year it was received, but with Corona we find ourselves giving refunds on money we have already paid taxes on. In such a split year payment (first payment 2020, final payment in 2021) when should the Canary Island VAT (IGIC) be paid?

Oscar Paoli

28 September, 2020 8:44 am

Hi Mike,

The Income should be declared in the period when the property is rented out, so a deposit now for 2021 is declared together with the remainder of the income in the corresponding quarter of 2021. VAT is usually only payable on rental income when this is being run and you have registered as a business when rented from one person to another normally there is no VAT changed on the agreed rental price, however this may be slightly differnet in the Canaries as they have some differences in their legislation.

We would highly recommend to get in contact with a local solicitor or tax advisor who can assist you with the VAT in the Canary Island.

With kind regards,

Ábaco Advisers

Matt

7 October, 2020 9:18 pm

Hello, i have Spanish residency and work and pay tax in Spain. I rent out my UK property and earn around £9000 a year, this is declared in the UK although due to the personal allowance i do not need to pay tax. The money goes into a UK bank account, do i have to declare it in Spain and if so is this on the Declaracion de Renta? Also the UK tax year is from April to March how would this affect things?

Oscar Paoli

13 October, 2020 11:20 am

Hello Matt,

Under the terms of the double Taxation Treaty the Tax on the rental income has to be declared in the UK as the property is there, however under the Tax Laws here it is also declared here under the terms of the same treaty, and any Tax paid in the United Kingdom on this income can be deducted in the declaration here however this does have some complications as the Tax year in the UK is different to Spain and most of Europe so you have to obtain clear information as to the Tax paid on the Rental Income form January to December and not April to March.

With kind regards,

Ábaco Advisers