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V0236-22 10 February 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · establecimiento permanente

Vacation home rentals are subject to VAT; tenant is liable

A developer asks whether buyers of vacation rental properties carry out entrepreneurial activities and whether non-residents have a permanent establishment. The DGT confirms that vacation property rentals are not exempt from VAT and that the liable party is the entity operating the property.

The question raised

Whether it is considered that the acquirers carry out a business activity for Value Added Tax purposes. Whether acquirers resident abroad or in the Canary Islands would act through a permanent establishment. If applicable, census and formal obligations relating to Value Added Tax. Deductibility or, where applicable, refund of the Value Added Tax amounts incurred in the acquisition of the property.

The DGT's ruling

The leasing of housing for vacation exploitation is subject to VAT as it is not an exempt lease for housing. Non-resident owners shall not have a permanent establishment if they do not possess their own human and technical resources for management. In this case, the taxable person shall be the entity exploiting the property. Owners may deduct and request the refund of VAT in accordance with the procedures set forth in Articles 119 and 119 bis of Law 37/1992.

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