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V3208-17 14 December 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · arrendamiento de vivienda

Residential leases for professional sub-letting are subject to 21% VAT

An individual leases a property, allowing the tenant to sub-let it as a tourist apartment. The DGT has ruled that the transaction is subject to VAT at the standard rate as it does not meet the residential exemption, and there is no obligation for IRPF withholding if the tenant is not a taxable person.

The question raised

Exemption of the original lease for Value Added Tax purposes and subject to withholding under Personal Income Tax.

The DGT's ruling

The lease of a property intended to be subleased in the course of a business activity ceases to be exempt from VAT and becomes subject to the general rate of 21%. Regarding Personal Income Tax (IRPF), the lessee is not obliged to withhold tax on income from real estate capital if they do not hold the status of a taxable person according to the RIRPF.

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