VAT on housing leases through an online platform
Tax Agency (Hacienda)
When we talk about online platform and the leasing of homes for tourism purposes, we all have Airbnb at our head, which has become the colossus of intermediation between owners of rental homes and tenants.
The great success of this platform has been how easy it is to publish your home for rent, with a very intuitive website and many tutorials, and be able to choose your tenant, based on comments and scores of other property owners in which he has already been hosted.
This facility “in the business” may have caused many owners have not thought about the tax implications, so our intention in this post is to describe how VAT works in these leases of housing for tourism purposes.
Is the owner of a property for rent an entrepreneur or professional for VAT purposes?
The answer is yes, and this is reflected in art. 5 of the LIVA (hereinafter, VAT Law) in which it is said that entrepreneurs or professionals are considered, among others, to those who make one or several deliveries of goods or services that involve the exploitation of a tangible or intangible asset in order to obtain continuous income over time and in particular to property lessors.
In accordance with the foregoing, the landlord of a dwelling will be considered an entrepreneur or professional for the purposes of VAT and the aforementioned lease will be subject to the tax.
So, why do home leases do not carry VAT?
Because there is an exemption included in art. 20.On.23 in which it is said that the leases of buildings or parts thereof destined exclusively for housing will be exempt from VAT. This is the reason why when a homeowner rents it for other uses than housing, for example, offices or professional offices, that lease is subject to VAT.
Yes, VAT will be applied to leases of housing for tourism purposes that include some complementary service specific to the hotel industry
The VAT Law sets as examples of “complementary services specific to the hotel industry” those of restaurant, cleaning, laundry or other similar (art 20.uno.23º b. ‘LIVA). In this sense, lodging services are characterized by extending attention to customers beyond the mere provision of a property or part of it.
That is to say, the lodging activity is characterized, unlike the rental activity of houses, because normally it includes the provision of a series of services such as reception and permanent and continuous attention to the client in a space designed for that purpose, periodically cleaning the property and accommodation, periodic change of bed and bathroom linen, and making available to the client other services (laundry, luggage storage, newspapers, reservations, etc.), and, sometimes, provision of food and catering services. (DGT Inquiries V0081-16 and V0575-15)
What are the complementary services?
In particular, complementary services of the hotel industry are considered, in addition to the aforementioned, the cleaning services of the interior of the apartment, as well as the services of change of clothes in the apartment, both provided on a regular basis.
On the contrary, the following are not considered complementary services of the hotel industry:
– Cleaning service of the apartment lent at the entrance and at the end of the period contracted by each tenant.
– Change of clothes service in the apartment provided at the entrance and at the end of the period contracted by each tenant.
– Cleaning service of the common areas of the building (portal, stairs and elevators) as well as the urbanization in which it is located (green areas, access doors, sidewalks and streets).
– Technical assistance and maintenance services for possible repairs of plumbing, electricity, glassware, blinds, locksmith and electrical appliances.