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V0397-22 28 February 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · arrendamiento de vivienda

Reduced 10% VAT rate applies to residential leasing with hotel-style services

A holiday rental property owner sought clarification on the applicable VAT rate when leasing a property to a travel agency that provides additional services. The Directorate General for Taxes (DGT) ruled that because complementary services typical of the hotel industry are provided, the transaction is not exempt and must be subject to the reduced 10% rate.

The question raised

The tax rate that the consultant must apply to the travel agency for Value Added Tax.

The DGT's ruling

The leasing of furnished dwellings is exempt from VAT provided that no complementary hotel industry services are provided. If the lessor undertakes to provide services such as cleaning or linen changes on a weekly basis, the operation ceases to be exempt. In this case, as it possesses characteristics of accommodation, the reduced tax rate of 10% applies.

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