Many of our clients purchasing second homes in Ibiza express an interest in leasing their properties when not personally occupying them, especially during the lucrative high summer season.
To rent out officially, a rental license is necessary, which can be applied for at the town hall. Certain criteria must be met by the villa, as outlined below.
Tax on rental income in Ibiza
If you are a resident in Spain and rent out your property long-term, you can deduct expenses (mortgage, maintenance, etc.) – but only 40% of your final profit is taxable.
If you rent out per day, weeks, or just one month, you do NOT have the 60% deduction of the profit, but need to pay tax on the total profit. The tax rate depends on your other income and goes up to 52%.
If you are a EU resident, you CAN deduct your expenses, and your tax rate is 24.75%. If you are a non-EU resident, you CAN NOT deduct any expenses, and your tax rate is 24.75%.
No matter your status, if you officially offer other services in connection with your rental property – like daily cleaning, breakfast, etc. – you are obliged to charge 10% IVA (VAT). If you do not offer any other services, you do not need to charge IVA (VAT).
For EU residents, the income would be taxable in the home country, but under the terms of the double tax treaty, any tax paid in Spain by EU residents can be credited against the tax due in the home country.
Criteria for applying for a Touristic rental license in the Balearic Islands.
You need a touristic rental license to be able to rent your property out legally. Below is a summary of what I understand are the most important points of the law that relates to tourist rentals in Ibiza. Some of these are changes which came into effect in August 2018.
Villas
- The rental period for a tourist rental seems to be a maximum of one month per client.
- There is a limited number of bedrooms assigned (as for hotels). This is not specified yet in all areas.
3a. There are zones that will be classified as not suitable for tourism specified by each municipality/town hall, and therefore properties in these areas will not be able to apply for a license.
3b. Protected rural land is already classified as not suitable for tourism, and no new licenses will be granted for properties in these areas.
3c. Common rustic areas still will be suitable for tourism.
3d. Those properties that already have an existing license will not be affected either way.
3e. To apply, it is necessary to obtain a letter from the town hall confirming that the property is in a suitable zone. - Energy certification is required, depending on the age of the property. If the property is built before 31/12/2007, this will not be required.
- It is not possible to market properties that have had punishments for serious violations of the urban laws until these violations have been corrected.
- Only properties with a valid “Cédula de Habitabilidad” or a similar certificate can get a license. The capacity of the occupants of the property has to correspond to the certificate. The Cédula de habitabilidad needs to be renewed every 10 years and is a small one-page document that can only be obtained if the property has a “final de obra” or is totally legalized. In the past, this was only obtained so water and electricity could be connected to the property – however, now it is also necessary to apply for a touristic rental license.
- The people staying in the property must be reported to the police – again like hotels.
- The rental property has to be a minimum of five years old – and in this period, it must have been used privately.
- An advertiser (rental agency) of a property without a proper rental license application or without using the tourism inscription number will be made responsible along with the owner. This can incur fines from 4,001 – 40,000 euros.
- A property has to have one bathroom for every four beds.
Apartments
Apartments now have the possibility to obtain a rental license, but only if the board of owners allows this.
Furthermore, in addition to the above;
- Each license will have to be renewed every five years.
- The rental agent has to inform the clients in writing about the house rules and ensure they are understood and respected.
- If the rules are not respected, the rental agent has to require the tenant to vacate the property within 24 hours.
- The owner has to have sufficient insurance to cover damages that the clients may cause to the community property.
- There has to be a service number for the community open 24 hours.
New prices for the license
Cost for a rental license is now €600 for the application + the following per bed:
- 1 bed: €4,300.00
- 2 beds: €8,643.00
- 3 beds: €13,029.40
- 4 beds: €17,459.70
- 5 beds: €21,934.30
- 6 beds: €26,453.70
- 7 beds: €31,018.20
- 8 beds: €35,628.40
- 9 beds: €40,284.70
- 10 beds: €44,987.50
- 11 beds: €49,737.40
- 12 beds: €54,534.80
Disclaimer
Please note that the laws change very often, and although I have done all I can to correctly interpret the law, the above is in no way full legal advice, but my interpretation of the law, and it does not substitute the legal report of a lawyer.
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