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V3757-16 7 September 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · reserva para inversiones en canarias

Vacation rental is only an economic activity if it provides hotel services or employs staff

The applicant inquired whether operating a holiday home constitutes an economic activity and if related investments (furniture, air conditioning, swimming pool) qualify for the RIC. The DGT ruled that, in the absence of hotel services or employees, the income is classified as income from real estate capital rather than an economic activity.

The question raised

Taking into account the response to the binding consultation of September 10, 2015, from the Ministry of Finance of the Government of the Canary Islands, which states that "in the activity of operating holiday homes, a tourist accommodation service is provided and not a residential lease service" and therefore "the provision of the service of assigning holiday homes is subject to and not exempt from IGIC as the exemption provided for in Article 50.One.23 of Law 4/2012 does not apply", it is asked whether the operation of the holiday home is considered an economic activity and, if so, whether the investments to be made in the aforementioned property are valid to realize the RIC (specifically, that the RIC would be realized through the purchase of new furniture and installations such as air conditioning or a swimming pool).

The DGT's ruling

For the lease of a holiday home to constitute an economic activity, it must provide services typical of the hotel industry (cleaning, laundry, etc.) or employ at least one person under a full-time employment contract. If the property is only leased with its furnishings without these elements, the income is classified as real estate capital income. In the latter case, no economic activity exists and the assets cannot be assigned to realize the RIC.

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