LEASES OF TOURIST-USE HOUSING IN SPAIN ARE EXEMPT FROM VAT UNLESS COMPLEMENTARY SERVICES OF THE HOTEL INDUSTRY ARE PROVIDED

31 Jul LEASES OF TOURIST-USE HOUSING IN SPAIN ARE EXEMPT FROM VAT UNLESS COMPLEMENTARY SERVICES OF THE HOTEL INDUSTRY ARE PROVIDED

Real estate tax exemption in residential leases for tourist use

According to a recent consultation with the Spanish Dirección General de Tributos (DGT) carried out by an entity that seeks to acquire four houses and dedicate them to the leasing for tourist use, considering the possibility of providing services of laundry and sale of drinks or prepared meals.

In view of doubts of how to tax these leases in VAT the question was raised before the DGT and this was the reply:

1. The DGT recalls that the leases of real estate suppose the birth of a taxable fact of the levy, where the person who does it has the consideration of businessman or professional for the provision of service that carries it out (LIVA art. 4, 5 and 11).
2. The DGT points out that the leases of buildings or parts thereof destined exclusively to housing are tax-exempt depending on their application of effective use for that purpose. Not included within this exemption, among other causes, are those properties where complementary services of the hotel industry are also provided (LIVA art. 20. Uno .23 ).
3. The DGT defines that it understands by complementary services of the hotel industry, and for that it characterizes the activity of lodging that unlike the activity of renting of houses, comprises the provision of a series of services such as reception and permanent and continuous attention to the client in a space destined for the purpose, periodic cleaning of the property and the lodging, periodic change of linen and bath, and making other services (laundry, custody of suitcases, press, reservations etc.) available to the client of , and sometimes provision of food and catering services.
4. On the basis of the foregoing, the administration concludes that: A) If the entity is not limited to the mere provision of the property but is providing any service of the hotel industry, the provision of services is subject to tax and not exempt. The tax rate of these services is 10% (LIVA art. 91. Uno. 2. ). B) The leasing by seasons of a property dedicated to the tourist rent, where only the services envisaged as obligatory in the regulatory regulation of this type of establishments are provided, where it does not appear that complementary services of the Hotel industry, is exempt of this tax.