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V3494-15 12 November 2015 · SG de Fiscalidad Internacional Criterion in force
IRNR · establecimiento permanente

Non-residents can deduct mortgage repayments and certain expenses from rented property under specific conditions

Dutch residents inquire about the deductibility of property expenses and amortisation of a property in Spain used partly for rental and partly for physiotherapy. The DGT clarifies the treatment of rental income from real estate and economic activities.

The question raised

The consultants raise the following questions:

The DGT's ruling

Hotel or apartment rental expenses are not deductible as they are considered gratuities, unless a professional relationship is proven. Restaurant expenses are only deductible if incurred for client or supplier hospitality. Housing depreciation is deductible for the portion allocated to rental (based on the leased period) and for the portion allocated to the economic activity, respecting the limits of the Corporate Income Tax Act. Civil societies with a commercial purpose shall be subject to Corporate Income Tax as of 2016.

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