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V1456-24 17 June 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · subarrendamiento

Leasing properties for room subletting is subject to VAT; rents may be classified as investment income or economic activity

A taxpayer has requested clarification on the tax treatment of leasing a property for the purpose of subletting rooms. The DGT ruled that the initial lease is subject to VAT and that subletting is also subject to VAT, depending on whether hotel-like services are provided.

The question raised

Question posed In relation to Value Added Tax, the request seeks to ascertain the tax treatment of the initial lease and the subsequent sublease thereof.

The DGT's ruling

The lease of a dwelling to an entrepreneur for the purpose of subletting is subject to and not exempt from VAT. The subletting of rooms is also subject to VAT if no hotel industry services are provided. For Personal Income Tax purposes, income from subletting constitutes returns on movable capital, unless it constitutes an economic activity through the organization of complementary hotel services and means.

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