Lawyer Raymond Nesbitt goes on to explain how seasonal lets can be a viable alternative to holiday home rentals in some instances.
By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of October 2017
Photo: Cala Llombards, Majorca, Spain.
Introduction
Are you fed up with the intrusive and obnoxious new regulations on private holiday home rentals in Spain? *cough* Balearics *cough*
Did you know that, at times, landlords can circumvent these restrictive regional regulations offering their properties as seasonal lets instead? I.e. no rental licence is required. Were you aware that thousands of properties all over Spain are rented out legally every year as seasonal lets to tourists without much of a hindrance?
Interested? Read on.
Definitions, definitions
|
Private holiday home rentals |
Seasonal let
|
Applicable law |
regional holiday home regulation |
Spain’s Tenancy Act (LAU) |
Rental registration required |
yes |
no |
Rental licence required? |
yes, in some regions i.e. Balearic Islands |
no |
Urban property |
yes |
yes |
Rural property |
no |
yes |
Commercialization (offer) |
touristic channels |
forbidden to use touristic channels |
Online booking system |
yes |
no |
Accommodation time |
less than 2 months (varies between regions) |
no time limit (days, years) |
Can you rent out individual rooms? |
yes |
yes |
Guest number limitation |
yes |
no |
Accommodation mandatory requirements |
yes i.e. bed cleaning, A/C |
no |
Place of permanent abode |
no |
no |
Tenant entitlements |
no |
no |
Rental deposit |
varies |
two-month rental |
VAT |
usually exempt* |
exempt |
Subject to regional property inspections |
yes |
no |
Fines (non-compliance) |
humongous. Varies significantly between regions. |
no |
Civil liability insurance required? |
yes, in some regions |
no |
Forbidden to rent out |
yes, in some regions |
no restrictions |
Enforced |
locally (with regional variations) |
nationwide |
Licence of First Occupation required? |
yes |
yes |
Rental tax relief available? |
yes |
yes |
Tax on rental income to be declared and paid in Spain? |
yes |
yes |
* With or without VAT?
In principle, as a general rule, VAT is not applied to holiday rental homes. However, if you offer any of the following below your rental may be regarded as assimilated to offering hotel accommodation in which case you need to invoice everything with VAT which impacts the profit margin of the business increasing its costs:
What is understood by ‘Touristic Channels’?
It is a bit of a grey area to be honest and may vary from one region to the next. Almost every region in Spain has approved specific regulation on what is understood by private holiday rental homes. Regulations vary from one region to another; you are strongly advised to seek legal expertise on your particular region. More details in my article Holiday Rental Laws in Spain for a full region-by-region list of approved holiday home rentals. Offering a property through a touristic channel automatically tags it as a holiday home subject to strict regional laws.
As a generalization, if a property is offered with any or all the following points it is regarded as being advertised through a touristic channel:
Does this article mean that landlords have carte blanche to simply sidestep stern regional holiday regulation at their whim using seasonal lets instead?
No. It takes a case-by-case approach. Not everyone will qualify for a seasonal let e.g. landlords who market their properties through touristic channels.
Talk to a lawyer, we can confirm if you can benefit from it and draft a contract for you.
Do I need to declare and pay tax on my rental income in Spain in both cases?
Yes.
We have a competitive taxation service that deals with Holiday Home Accounting Service (HRAS).
On average, we are able to reduce a landlord’s rental income tax by 40% using tax relief (also available to non-residents). Ask us.
Conclusion
Most landlords wrongly assume they must rent out their Spanish property to tourists in compliance with all the new batch of regional rental laws featured in the press - which is simply untrue.
For decades, landlords all over Spain have been letting their properties out to tourists using seasonal lets without a problem. Seasonal lets at times are by far a superior option than renting out as a holiday home. In some regions in Spain the requirements of the new rental laws are so overzealous (read daft) that you are expected to offer a private home on par with the services offered by a four-star hotel. Seasonal lets cut through the red tape and may save landlords thousands of euros on the long run.
Not all landlords are required to offer their properties as holiday home rentals and comply with the cumbersome (and often expensive) new regional rental regulation. In some instances, landlords would be far better off to simply offer their properties as seasonal lets which do not have associated restrictive requirements i.e. you don't need to install A/C in every room (Andalusia), you don't need to attain a rental licence (Balearic Islands), you do not need to hire an insurance cover etc.
Seasonal lets exist since 1994 and you never hear landlords complaining over them - that should tell you something.
On the other hand, regional holiday home laws are fairly new (post 2013) and you hear most landlords moaning bitterly on them; or worse, not being allowed to rent out because they do not meet the stringent requirements set out in these laws!
You may be surprised to learn you can opt for a seasonal let instead saving yourself considerable time, money and hassle. You could avoid home inspections and steep fines altogether!
In some cases, even landlords who are forbidden to rent out their properties under the current regional holiday home regulation may be stunned to find out they can in fact rent them out as a seasonal let without much of a problem!
Don't be goaded into using new rental contract types that only exist for the benefit of powerful hotel lobby groups. Be smart and make it easy on yourself – speak to professionals!
Be proactive, talk to a lawyer. We can make it happen.
“Hecha la ley, hecha la trampa.” – Spanish saying.
Loosely translated as “for every law, there is a loophole.”
Larraín Nesbitt Lawyers, small on fees, big on service.
Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, litigation and inheritance. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form to book an appointment.
Article originally published at Spanish property Insight: Seasonal lets: an alternative to holiday home rentals.
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