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V0432-24 14 March 2024 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · arrendamiento de inmueble

Companies must withhold Corporate Tax and apply 10% VAT when providing hotel industry services via subletting

A company seeking to sublet residential properties to provide hotel industry services has requested a ruling. The DGT has ruled on the classification of the contract, Corporate Tax and Personal Income Tax withholding obligations, the application of VAT, and registration in the Economic Activities Tax (IAE).

The question raised

Inquiry for the company operating through subletting: Obligation or possibility of registering an economic activity when having no employees. Corresponding IAE heading if registration is possible/mandatory. Implications of this type of rental regarding VAT and Corporate Income Tax withholdings.

The DGT's ruling

The contract is classified as a lease of urban real estate, which obligates the company to apply a 19% Corporate Income Tax withholding. For Personal Income Tax, the company must withhold from the owner except in cases of legal exceptions. Regarding VAT, subletting with hotel industry services is subject to the 10% rate. Finally, both parties must register in the Economic Activities Tax (IAE) according to the activity performed.

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