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V2297-18 7 August 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · servicios complementarios

Leasing residential property with hotel services subject to 10% VAT and potentially classified as economic activity for Income Tax

A taxpayer queried the tax classification of renting a villa that includes hotel-style services. The DGT ruled that if services such as cleaning or weekly linen changes are provided, the operation is subject to VAT and may be classified as an economic activity for Income Tax purposes, depending on how it is managed.

The question raised

1. Classification of income obtained, deductibility of expenses, and, where applicable, subject to withholding.

The DGT's ruling

The leasing of housing with complementary hotel industry services (such as cleaning or weekly linen changes) is subject to VAT. If the owner leases directly with these services, the 10% rate applies and the income constitutes returns from economic activities. If the property is assigned to a company so that it may provide the services, the lease is taxed at 21% and the income constitutes returns from real estate capital. The exemption from Wealth Tax is not applicable as the requirements for economic activity are not met.

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