Is Your Holiday Home Legal?
Media reports of holiday home owners in Spain being fined up to EUR30,000 for renting out their homes without a licence has caused controversy and concern. It is not surprising. Mediterranean Spain is abounding with vacationers’ second homes, which are often rented out to friends, colleagues, neighbours, and strangers too. Adding to the confusion is the ambiguity of information from the authorities. This is largely due to regulations varying from region to region.
A recent survey by the Spanish property abogado spagna portal Kyero found that 82% of mainly European respondents did not know whether rental licences were required in their province. “Clearly, there is a lack of knowledge and awareness about this particular aspect of Spanish law,” says Martin Dell, head of Kyero.
It is not known how many second home owners are dependent upon rental income as this largely unregulated activity falls into the ‘informal economy’ category. The numbers involved will vary from one province to another, and fluctuate with the economy. There can only be one answer to the question on everyone’s lips: If you decide to rent out your holiday home then it is in your interests to know the legal situation wherever your home is situated, Spain or elsewhere.
Always employ a local lawyer (in Spain an abogado) local to where you either have or intend to buy your buy-to-let property. He or she will be best placed to peruse the legislation governing such use. They will identify any clauses or covenants within the property deeds that relate to short term rental activity. i.e. less than three months.
Either your solicitor or you can contact the local authority to see if a ‘tourism licence’ is required. In most cases your enquiry should be directed to the Town Hall. (Ayuntamiento) If there is such a requirement they will be best able to explain and will likely process the application for you. Inevitably contradictions will exist so again your solicitor is best equipped to ensure the local legality of your intention.
Be aware too of taxation rules which again vary from country to country. You must presume that tax is payable on rental income earned. Try not to be concerned that taxes may be sufficiently burdensome to make renting unprofitable. There are double taxation treaties between most countries.
Your financial advisor is the best person to arrange the paperwork so you pay it just the once. These take into account and offset taxes already paid. In Spain, the gestoria, who is often engaged on your behalf by your lawyer, can guide you in compliance. They know the ropes, have the right contacts, and are said to be worth their weight in gold. Gestoria are unique to Spain where bureaucracy is so endemic that these specialists have come about to navigate their way through what is often a ponderous administrative process.