New tax form introduced to control holiday rental income

Hacienda, the Spanish tax authority, has recently published new legislation that will oblige all intermediaries in the rental of tourist accommodation, such us companies like Prestige Villas or holiday portals, to produce periodic statements identifying the owners of the properties being advertised and the amounts for which the rentals are offered to bring into the open all the undeclared tourist rentals by submitting the new Form 179.

Owners who rent their houses in Spain are required to declare rental income through Form 100 or Form 210 depending if the owner is a tax resident in Spain or not.

Form 179 will enter into force in July 2018, and those required to file this return will be required to provide information for the entire 2018 period, including the first two quarters of the year.

This new form must be filed on a quarterly basis during the month following the end of each quarter, as is the case with the quarterly IVA (VAT) declaration. I.e.: the first quarter will be presented in April and the second quarter in July.

In summary, every owner who has rented their property in Spain and do not declare the income, according to the new law from 2018, Hacienda, with the information received through Form 179, will know all the necessary details to claim the taxes for rental incomes to prepare and file the corresponding fine.

The information provided in this article is not intended to be legal advice but merely conveys general information related to tax and legal issues. If you are a property owner concerned about any of the information in this blog post, it is advisable that you speak with your Spanish tax advisor or accountant.

Moving to Mallorca – What Next?

So, you have bought your property in Mallorca, and the dream is about to become a reality. Exciting stuff! So what should come first?

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The best advice is to get this done at the beginning. Use a local ‘gestoria’ and lawyer to advise you on the process and, if possible, to actually do it for you. The Oficina de Extranjería (Immigration Office) is not the most exciting place in the world – in fact, this is definitely not the Mallorca you were dreaming of – but to get what you need, you have to be there physically. If you are moving here full-time, a residencia card is obligatory, and if you are coming from the UK with Brexit looming, it’s best to get it done.

Tax is also something to think about, as a non-resident you are liable to pay a non-resident income tax, if you are renting your property then you need to declare your income. See our Tax Guide here.

At a more local level, signing on to the Padrón at your Town Hall is a happier item on your to-do list. Take your passport, NIE (or Residencia card if you already have it), the deeds to your property and a recent utility bill, and you will receive a ‘Certificado de Empadronamiento’. Along with being registered and able to vote in local elections, the best of all is an entitlement to discounted travel around Spain. Flights to the mainland can be reduced by 50%, inter-island travel by 75%. You can get the ‘Certificado de Viaje’ once you’re on the Padrón and it is well worth the bother!

Language

If you’re getting mixed up with your “buenos días” and “bon dia”, your “gracias” and “gràcies”, then you know of the language complexities in your new home. While many live in Mallorca without learning a single word of Spanish or Catalan, those that do can definitely notice a difference in their daily life. Neighbours become friends, shopkeepers know you by name, the people in your preferred coffee bar will know what you want before you’ve sat down; in general, people open up to you.

There are language schools in the north, and there are private teachers who offer one-to-one sessions and conversation classes. Also, as English is essential to islanders, many are keen to learn from you. Language exchanges are frequent and these involve nothing more than sitting having a coffee and chatting in two languages, picking up vocabulary and phrases along the way.

For children, the younger they are, the easier it will be for them to learn. With sponge-like brains, their capacity to pick up a new language will thrill and astound you. In a local school, the children can receive extra help, but nothing works better than playing with new friends.

Social Life

Depending on where you are living, you will find it relatively easy to find new friends. Foreign residents tend to converge naturally as they frequent the same bars and restaurants. But once the novelty wears off, there are plenty of ways to integrate and meet people from the whole community.

Sports Centres in the north have swimming classes and regular municipal-run activity for many sports including general fitness. There are also private groups that meet every week including football, rugby, netball, athletics and more. Trail running in the Tramuntana is popular, and many meet at the weekends and compete in local races. Language classes will help you join in fully, but even if your grasp of the language is weak, a willingness to learn is often repaid with patience and help.

If sport is not your thing, there are plenty of local groups and organisations that hold regular meetings and events. Whether it’s charity appeals or wine appreciation, bridge or art classes, there’s plenty of activity, and a quick look on Facebook or asking around will point you in the right direction.

Life in Mallorca is relaxed, it can be cold and quiet in the winter, lively and bright in the summer, but each season rewards with its stunning landscape and inimitable charm. There’s so much more to it than the beach and living here (for long holidays or long-term) means it is all there for the taking.

Holiday rental license prices revealed

The Board of Tourist Accommodation Exchange (CBAT) will approve the pricing to buy holiday bed licenses in the Balearics on the 26th June.

To set minimums, the CBAT has determined prices for each sector which include 875 Euros per place of occupancy for apartments, 3,500 Euros for villas and townhouses and 291,67 Euros for those who choose to rent their home for up to 60 days. There will be the possibility to split this payment into five yearly instalments.

All licenses require the habitability certificate to determine the maximum occupancy which cannot be surpassed.

Owners will have the option to renew the licenses every five years and additionally if they wish they can sell them back since they acquire them in usufruct.

Both hoteliers and homeowners will have to start paying the new prices once they are in force. Holiday homeowners will be able to buy these places from the moment in which the tourist zoning in Mallorca is approved.

The total number of places that the CBAT currently controls is 42,000 and the funds collected will be invested to improve tourist infrastructure. An investment of 9 million Euros is expected for this year.

When to apply for a renting license and how much it will cost

For the past year, we’ve been writing about the current situation regarding renting licenses for holiday villas and apartments on our blog. Specifically, we’ve discussed the legal requirements, the zoning project. Today we are back with an update that helps shed some light on some of the points that need more clarification: when and how much will licenses cost.

Provisional date

The Mallorca Council has prepared a new zoning proposal after the feedback received from the different municipalities of the island, and now the Environmental Commission of the Balearics has a month to finalise their report. This report is expected to be approved in the parliament session on the 27th July, but then a period of 45 days will be open to receive feedback and meet up with several associations pushing the final application date to the end of September. In the case of the capital, Palma, it looks like it might take a few weeks more until the 1st August, as their zoning proposal was introduced at a later date.

Cost

The determined prices for each sector which include €875 per place of occupancy for apartments, €3.500 for townhouses and villas and €291,67 for those who choose to rent their home for up to 60 days. Find out more about the pricing here.

5 Tips for Selling your Home

There’s no doubt of the desirability of owning property in Mallorca, so selling one should be a piece of cake, right? Well, if you are serious about selling it and doing so quickly, then not really.

The island is awash with beautiful properties. Many potential buyers will have stayed in some during their holidays, some may have decided to buy based on their experience of their luxury holiday home in Mallorca. Your property needs to live up to that dream; the buyers’ expectations.

Think about the character of your property, nine times out of ten, that is what buyers want. So walking into a home that you have lived in for the past ten years which is full of things that make up your daily life is not going to conjure their vision of life in Mallorca. Perhaps your property has been rented for a while and wear and tear is showing through. A cluttered house in a sad state does not shout “Mallorca Living”.

Tip 1: Have a good old clear out

It’s time-consuming and a pain, sometimes emotionally draining even, but you have to do it anyway so why not get started and improve the overall image of your property? A wide open space shows potential while a crammed and busy space just feels small.

Tip 2: Blank canvas & presentation 

Once you have this job out of the way, let us get cracking with the photo shoot. This is the first opportunity to give that perfect first impression. While you may have got rid of clutter, for the photos, take away personal items. Think about your home becoming a blank canvas for someone to come in and make their own.

Open up all the doors, windows and shutters and shed some light on the subject. Make it light and airy, inviting and attractive. We will do our best to highlight the character of your home and be sure to capture each and every part.

Tip 3: Cleanliness

With the above steps carried out, it’ll soon be time for viewings. Potential buyers are intrigued by the photos, now make this a reality. This is another first impression opportunity and it has to look good from the beginning, ie from the garden gate or front door. It should smell good too. Get rid of any rubbish, recycling and perhaps skip the fish dinner the night before. Neutralise your home, have fresh bed linen on the beds, mop the floors, put your old shoes away, wash the pet bedding and move rubbish/recycling bins out of the way.

Tip 4: Get everything working seamlessly 

At the viewing, let your Estate Agent do the selling, try and stay away so that potential buyers will feel comfortable enough to have a good look around. And be sure that when they do, your buyers don’t find any annoying things like a broken step, a door that won’t shut. Fix all these small jobs, it will make a difference.

Tip 5: Price

Lastly, it’s important to note, no one will bother to look if the price is wrong. Listen to your Estate Agent and look at similar properties that have just been sold in the area. You may be selling a Mallorcan dream, but it has to be at the right price.

Take a look at our range of properties for sale in North Mallorca. 

Renting License Requirements

A current trending and a much-debated topic of conversation right now is the regulations surrounding renting licenses in the Balearic Islands. Take note that before now, owners who wished to rent their property to tourists had to have a permit to do so. Apartments did not, however, comply with the guidelines to get a license and therefore were rented unregistered. Villas could apply and obtain a licence, called an ETV, at the local tourism authorities.
Right now, however, there has been a freeze on granting licenses until 1st August 2018, at the latest. Once this moratorium has been lifted, both apartments and villas alike will be able to apply for a permit, providing they comply with the strict stipulations listed below:
– Council certificate indicating the property sits on a holiday rental approved zone.
Just recently the president of the Consell de Mallorca, Miquel Ensenyat, the councillor of Land and Infrastructure, Mercedes Garrido and the councillor of Economic Affairs, Cosme Bonet presented the provisional zoning project for holiday rentals. You can see more about that in our previous blog post by clicking here.
– Cédula de habitabilidad / Certificate of Occupancy
Spanish law requires this document to control H&S conditions in any dwelling. This also dictates the maximum occupancy of the property.
– Age of building
The building needs to be at least five years old.
– Certificado Energético / Energy Certificate
With a scale from A to G. The law requires at least D for buildings finished after 2008 and F for older ones.
– Water meter
Every house or apartment must have an independent water meter as opposed to shared communal meter.
– Building community authorisation
The majority of neighbours in a community must authorise vacation rentals. This is a sticky point, as these associations change, the stance of the neighbours can change over time. If this authorisation was withdrawn, it would void the renting license, and the owner would have to stop marketing the holiday apartment immediately.
– Insurance
A comprehensive holiday rental insurance with third-party liability coverage of at least 300,000€.
– Data collection
All guests need to be dully logged with the Spanish National Police.
– License limit
There is a limit of 3-holiday properties per owner and sorely individuals as opposed to businesses or corporations.
– Property equipment
The equipment of the property needs to meet at least the minimum requirement as established on annexe 6 from decreet 20/2015.
– Length of the license
5 years after which the permit needs to be renewed. There are rumours that this limit will only apply to apartments whereas townhouses and holiday villas will not need to renew their licenses.
– Number of bathrooms
The property needs to have at least a bathroom for every 4 places of occupancy.
– Residents who wish to rent their home up to 60 days a year
There is a new type of license that allows residents to rent their homes for up to 60 days a year. If you want to apply for this type of license, you will need to include in the application a certificate of residency issued by your council. The period of 60 days must be consecutive and set in advance. This type of license would also allow you to share a part of your home i.e: rent a room to visitors.
– Beds / places
The beds or places of occupancy must be purchased from an island-wide stock shared with the hotels. At the moment there are around 42,000 beds available in this stock. The final pricing per place of occupancy for villas, apartments and 60-day home residence lets will be 3500€, 875€ and 291,67€ respectively per place of occupancy.

Our team at Prestige Villas will keep a close eye on upcoming news regarding the holiday rental legislation. Keep up to date by subscribing to our newsletter: click here.

Holiday Rental Zoning Project in Mallorca

The president of the Consell de Mallorca, Miquel Ensenyat, the councillor of Land and Infrastructure, Mercedes Garrido and the councillor of Economic Affairs, Cosme Bonet have presented today the provisional zoning project for holiday rentals. This proposal is currently under public exposition until the 12th of March.

Licensed holiday villas constitute a significant part of the island economy. According to the records from September 2017, Mallorca has 40,073 beds in registered holiday rental properties. Furthermore, there are 45,149 beds currently under application, and approximately 11,000 are expected to initiate the process soon.

Last year the Govern Balear approved a new renting law affecting the Balearics and a one-year moratorium until the 1st of August for the different Island Councils and the Ajuntament de Palma to determine in which areas holiday rentals will be allowed. We wrote about this law extensively in our blog post, and you can read about it here.

Until this zoning is officially approved, possibly as early as next week, only licensed properties like those available on our website PrestigeVillas.com can be advertised.

This authority is planning to initially allow holiday rentals in villas and apartments up to 60 days a year in so-called “saturated” towns, initially limited to Palmanova, Magaluf, Santa Ponça and Peguera.

Other declared saturated towns will be:

  • Alcúdia
  • Randa (Algaida)
  • Ariany
  • Banyalbufar
  • Port des Canonge (Banyalbufar)
  • Orient (Bunyola)
  • Ullaró (Campanet)
  • Deià
  • Llucalcari (Deià)
  • Sa Cala (Deià)
  • S’Empeltada (Deià)
  • Ses Coves (Deià)
  • S’Esglaieta (Esporles)
  • Estellencs
  • Es Carritxó (Felanitx)
  • Fornalutx
  • Marratxinet (Marratxí)
  • Pollença
  • Es Vilà (Pollença)
  • La Font (Pollença)
  • Santanyí
  • Llombards (Santanyí)
  • Ruberts (Sencelles)
  • Ses Salines
  • Sóller
  • Biniaraix (Sóller)
  • L’Horta (Sóller)
  • Valldemossa
  • Es Port (Valldemossa)
  • S’Arxiduc (Valldemossa)
  • Son Ferrandell (Valldemossa)

In inland protected areas no rental licenses will be allowed.

According to Ensenyat “Holiday rentals are not a problem. There are areas where holiday rentals help support the local economy of Mallorca. By this zoning project, we intend to identify where these rentals become a problem to limit them and in which places they contribute to the local economy. We intend to find social as well as ecological balance.

Councillor Garrido explained earlier today that “by this zoning project we are outlining what we want to protect. We do not want to overexploit our water resources or turn our towns into theme parks.

This proposal is also wanting to assist the residents finding affordable housing options. Finally, councillor Bonet has appointed that “holiday rentals, especially when in inland towns, have granted an opportunity to the residents to have access to share a part of the wealth coming from tourism that had never been accessible to them before. Very often we see visitors that decide to repeat and wish to know better the area.

Our team at Prestige Villas will keep a close eye on upcoming news regarding the holiday rental legislation. Keep up to date by subscribing to our newsletter: click here.

New law for holiday rental apartments in Mallorca

In recent years, villas and townhouses have had it easy to obtain renting licenses whereas apartments, on the other hand, have not been allowed to apply for a renting license for the last two decades.

A way round this used to be the “Ley de Arrendamientos Urbanos”, sometimes referred to the tenancy act in English as this law does not set a minimum length of a let. Many owners and agencies were legitimately using this law for apartment rentals. As long as those properties were not advertised as being “holiday apartments” and no additional services were being provided i.e. cleaning, assistance phone, etc., and a lease contract was signed, they were within the law.

Recently, the Balearic Parliament has approved a new holiday rentals’ legislation. In addition to regulating the commercialisation of tourist accommodation, a real ceiling has been placed on the number of beds available in the islands. A balanced solution has been sought between the coexistence of residents and tourists and addressing housing needs.

According to the Government, this new ceiling of beds is meant to tackle the unlimited growth of tourist accommodation capacity of the Balearics. Whereas owners of holiday rentals such as villas or townhouses which are already licensed will be unaffected by the new bill, there is now a one-year moratorium on new permits for new holiday rental properties. The local councils and the town hall in Palma will use this period to determine which zones will be allowed to register new holiday rentals’ beds.

A new aspect of these new licenses is that you will need to buy places of occupancy from a limited stock.

There will also be a new restriction to limit the number of properties that one owner can market: no more than three. Additionally, any property that applies for a new license will have to be at least five years old.

The legislation creates new ways for prosecuting illegal supply by establishing a clear definition of the channels through which holiday accommodation is offered, and requires that a tourism license number is displayed on any advertisements. There’s even an email address so you can denounce your neighbours.

Furthermore, any property to be let for under thirty days will be deemed to be a holiday rental and therefore subject to all the relevant provisions in the legislation. This is the Government’s way of closing the tenancy act loophole on short-term rentals that are in fact for holiday purposes.

Any listing without license number will be deemed to be illegal, leaving websites and landlords liable to hefty fines – ranging from 20,000 to 40,000 euros for owners and up to 400,000 euros for agencies and portals. The Ministry of Tourism has set up an email for residents to denounce other owners who rent their apartments.

The legislation makes provision for the holiday rental of a “habitual dwelling” for a maximum of sixty days a year. This applies to both apartments and houses. These dwellings would still be subject to the zoning.

Our team at Prestige Villas will keep a close eye on upcoming news regarding the holiday rental legislation. Keep up to date by subscribing to our newsletter: click here. If you have any questions about the new law, feel free to contact us, we are here to help.

Duplex Maria – apartment for sale in Puerto Pollensa

Duplex apartment located in the residential area of Boquer, just 150 metres from the Pinewalk and the beach of Puerto Pollensa. It is a very quiet and comfortable community either for living during all year round or to spend the holidays, with a fabulous community pool.

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The property is facing east; it is very bright and sunny during the middle hours of the day. It is built on two levels: ground floor and first floor and is distributed as follows: on the ground floor, there is the kitchen, a toilet, laundry room and living room/dining area, with access to the terrace and private little garden.

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On the top floor, there are the bedrooms and two bathrooms (one is en-suite).

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Equipped with aluminium exterior finishings, ceramic tiles, pine woodwork and wardrobes, hot/cold air conditioning.

Build area: 95sqm

Bedrooms: 2 double, 1 single

Bathrooms: 2 full, 1 guest WC

Community swimming pool, AC, built-in wardrobes

Price: 278.000 €

 

See more on our website and enquire.

Tax Guide for Non-Resident Property Owners in Spain 2016

Management of Non-resident Taxes

 

Income Tax

As non resident in Spain and owner of a property you are liable to the non residents income tax. This tax is paid once a year. You pay it before the end of the current year for the previous one (in 2016 you will pay for financial year 2015). The amount due is calculated on the cadastral value of your property. This amount is the result of applying a 19.5% on the 1.1% of the assessed value.

Cadastral Value x 19.5% x 1.1%

Please note that if you rent your property you also have to declare this income but instead of declaring this income once a year you will have to declare it quarterly. The amount to declare is the entire amount received from the tenant, without deducting any costs*.

*Nevertheless, as we are dealing with taxpayers resident in another European Union member state, the expenses described in the Law on Personal Income Tax (IRPF) can be deducted when calculating the taxable base, as long as proof is provided that these expenses are directly related to income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain.

  • Income accrued in 2014: 24.75%
  • Income accrued in 2015: 19.5%

 

Wealth Tax

Wealth Tax has been re-established temporarily for tax years 2011, 2012, 2013, 2014 and 2015, accruing on 31 December of each of these years. Wealth tax is an annual tax, payable on the total value of your taxable assets as at 31st December. If you are resident in Spain you are liable to the tax on your worldwide assets; if non-resident, then only on your Spanish assets.

Tax base: The current tax-free allowance for non-residents is 700,000 €

Obligation to declare: All taxpayers with a positive tax liability are obliged to file a tax return.

 

Local Taxes for Property Owners

Local yearly Property Tax: The Impuesto sobre Bienes Inmuebles (known as IBI) is fixed by the local authorities ayuntamiento), depending on both the value of the land and of the property itself. This tax is paid yearly (before the end of November), and you can go to the local tax office and pay it directly when you receive the yearly notice in your postbox, or you can arrange an automatically debit from a Spanish bank account (the best option if you do not live permanently in Spain).

Local yearly rates: House-owners in Spain are also required to pay yearly rates, which is a contribution to street lighting, maintenance of facilities and rubbish collection. The yearly amount again depends on the area and is paid to the local council.

 

This text was written by the offices of Alfonso Benavides Y Asoc. S.L.

 

Find out More:

If you would like further information regarding this information, contact Alfonso Benavides Y Asoc. S.L. by email.