Rentals with hospitality services will be taxed as economic activities

The tax classification of income derived from real estate leasing is a critical point for owners managing properties with additional services. The Dirección General de Tributos (DGT) has clarified the boundary between income from real estate capital and income from economic activities.

What the DGT has ruled

The tax authority's criterion focuses on the presence of services typical of the hotel industry. If the lease of a property is accompanied by additional provisions such as cleaning, laundry, or other hospitality services, the income received must be classified as income from economic activities, in accordance with Article 27.1 of the Law on Personal Income Tax (IRPF).

Conversely, if these additional services are not provided and no full-time employee is hired for such purposes, the income maintains its nature as income from real estate capital.

What this means for you

For individuals managing tourist or short-term rentals, this criterion determines how they must declare their income and which expenses they can apply. The distinction is not merely theoretical, as it alters the structure of the tax return:

• If considered an economic activity: The owner must be taxed under this regime, which allows for the deduction of expenses linked to the activity.
• If considered real estate capital: Taxation follows the general rules for rentals without additional services.

A relevant aspect is that, should the activity be managed under the direct estimation regime, the contributions paid to the Special Regime for Self-Employed Workers (RETA) are considered a deductible expense for the taxpayer.

What should be done

Since the classification depends on the reality of the services provided and the staffing structure, it is necessary to analyze the actual operation of each property. The presence of cleaning or laundry services is the determining factor that shifts the income into the scope of economic activities. It is recommended to assess each particular case to ensure that the classification applied in the tax return is correct according to current regulations.