Q: “I recently read that the Spanish authorities are cracking down on illegal holiday lets this summer. I often rent my property in Spain out to other people – how do I make sure that what I’m doing is above board?”
Jacqui, Brighton
A: “You’re right: the Agencia Tributaria (Spanish tax authority) is launching a campaign to cut down on illegal rentals – and with recent figures showing that 75 per cent of the 65,000 holiday homes rented annually not being declared in Malaga alone, I’m not surprised.
“At the more extreme end of the scale, they’re cracking down on agencies that let properties without telling the owners, pocketing the entire rental income for themselves. However, they are also focusing their attentions on overseas owners who don’t declare their rental income, which often happens because they simply don’t know how to go about it.
“The good news is that it is not at all complicated to place your rental agreements on a completely legal footing. Firstly, you need to register your rental contract with the housing department. This is the only way of ensuring that you have the full protection of the law if any court case regarding your rental arises.
“Secondly, if you let your holiday home through an agent, they need to add 18 per cent VAT to the rent – and this must be paid to the tax agency. Once you receive your share, you need to set aside 24 per cent which is payable to the Spanish government.
“It’s crucial that you also declare the income to the UK Government. Don’t worry though – there is a double taxation in agreement in place between Spain and the UK so that you can claim back from Spain what you have paid in the UK meaning you’re not taxed twice.
“Adhere to these simple rules and you can enjoy the additional income that accrues from the rental of your Spanish property, secure in the knowledge that your will not receive any unwelcome communications from the tax office!”
Answered by Raquel Perez, managing director of Perez Legal Group. To speak to one of its lawyers or accountants, call +34 952 833 169, or visit PerezLegalGroup.es for more information.
