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V1569-18 6 June 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · régimen especial de agencias de viajes

Subletting residential properties for business activities is subject to VAT and follows the travel agency special regime

A company organises stays for foreign students in private residences and seeks clarification regarding VAT, Personal Income Tax, and Corporate Tax. The DGT rules that, when subletting as part of its business activity, VAT is not exempt and the special regime for travel agencies must be applied.

The question raised

Regarding VAT, whether the residential leases in which the consultant is the lessee are exempt from VAT and, where applicable, questions regarding the potential obligation of the lessors to issue invoices, as well as the location of services provided by the consultant itself to non-business or non-professional clients who are not established in the territory to which the Tax applies.

The DGT's ruling

The leasing of residential property ceases to be exempt from VAT when the lessee subsequently assigns it in the course of a business activity. The consultant must apply the special regime for travel agencies when offering accommodation and transport packages in their own name. For Personal Income Tax purposes, the owners' income will be classified as income from real estate capital if they do not employ a person under a full-time employment contract. Payments to owners are deductible for Corporate Tax purposes if they meet the requirements of registration, accrual, correlation, and substantiation.

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