A lot of English owners have private villas in Spain and choose to rent them during the summer months to try and get some income to help them with the maintenance of these villas. Until fairly recently, this has been an unregulated market.
However, as from November 2014, the Regional Authorities in Spain have brought in regulations covering private holiday rentals in Spain. As far as we can see, these regulations have not been put in force yet - but they are on their way! We are keeping an eye on Andalucia Junta and Tourist Organisations to keep you up to date. From the document available the regulations are likely to determine:-
- In order to be able to let out your home for a short term tourist let, you will need to have a licence
- In order to obtain a licence, you have to register your property with the Local Authority who will create a Register of Properties which will be controlled for their quality
- Failure to do this could render you liable to fines up to €150,000
How do you apply for the Licence?
You need to prepare the Licence Application which will be obtained from the Local Authorities Tourist Office together with a sworn statement once they implement the rules. There is apparently no cost to process the application, but it is probable that there will be costs or fees raised for opening a licence or registration or, indeed, the inspection.
What are the Local Authorities looking for?
There is no final up-to-date version, but the information so far suggests:-
- That it will be possible to rent accommodation on a room by room basis, and if so, this could be used with the title “Bed and Breakfast”. In such cases there could be a maximum occupancy of 15 guests.
- The following requirements apply whether you are using the property for Bed and Breakfast, or renting out the villa as a single unit
- Accommodation must have air conditioning in the living and bedroom area
- If you are renting out property between October and April, it must also be fitted with heating, maintaining a temperature of 19 degrees Celsius
- There must be a changeover cleaning service in between each guest occupation
- The property must offer a free internet service
- On arrival guests must be given a document and a contract form which sets out who the owner is, who the property manager is, and provide the registering number with the Register of Tourism, number of guests, check in and out dates and total price
- The owner must keep all receipts and proof of payments
- All of these documents must be kept and made available to the Tax Office
- The prices advertised should include water, electricity, heating, fridge, clean bed and bath linen
- Each guest must have confirmation of booking which includes total price of stay to include any extra charges
- One may ask for up to 30% of the total due as booking deposit and finance deposit on key collection
- There will be cancellation policies, with cancellations within 10 days of arrival only having to pay 50% of the total costs and anything over 10 days the owner would be entitled to keep the deposit only
- During the application process, the property will be inspected
- In addition, as well as the rental accommodation being furnished appropriately, including basic amenities, there should be an emergency telephone list, an evacuation plan, fire-fighting facilities and it may be sensible to check out the terms of insurance in your policy just to make sure that they do cover third party liability
What happens to Tax on your Rental Income?
If you are resident in the UK and you deal with your Tax Returns in the UK, then you will include any rental income and costs, on your UK Tax Returns.
However, you still have to declare as a non-resident, your holiday rental income in Spain. The income is charged at of 24.75%. Any tax paid in Spain, can be set-off against the tax liability in the UK.
The law is new, the authorities are in the process of compiling the Property Registers, and to date it is not known at which date the regulations will become binding. However, when the law does bite, failure to register your property and renting in breach of the regulations will render you liable to a potential fine of up to €150,000.
Forewarned is forearmed!
We will keep a watching brief focusing on Andalucia to keep you updated.