Economic Activities Tax
Article 78 of Royal Legislative Decree 2/2004, of March 5, which approves the revised text of the Law Regulating Local Finance (TRLRHL), defines the nature and taxable event of IAE , establishing that it is a direct tax of a real nature, the taxable event of which is constituted by the mere exercise, in national territory, of business, professional or artistic activities, whether or not they are carried out in a specific location and whether or not they are specified in the tax rates. For its part, article 79 TRLRHL regulates taxable economic activity, indicating that an activity is considered to be carried out on a business, professional or artistic basis when it involves the self-management of means of production and human resources or one of both, with the aim of participating in the production or distribution of goods or services.
Rule 2 of the Instruction for the application of the IAE Rates, both approved (Instruction and Rates) by Royal Legislative Decree 1175/1990, dated September 28, establishes that the mere exercise of any economic activity specified in the Rates, as well as the mere exercise of any other business, professional or artistic activity not specified therein, will give rise to the obligation to submit the corresponding registration declaration and to contribute for this tax, unless otherwise provided in this Instruction. Rule 4.1 of said Instruction provides that, in general, the payment corresponding to an activity authorizes, exclusively, the exercise of that activity, unless otherwise provided in the Law regulating this Tax, in the Tariffs or in this Instruction.
Therefore, in accordance with rule 4.1 we must analyse the different possibilities within the activity of renting tourist apartments in order to make a correct classification in the IAE Rates:
Firstly, we must analyse the activity in which a person or company rents, in exchange for a fee, holiday homes for specific periods of time and provides accommodation services. Taking into consideration that accommodation activity is characterised as normally including the rendering of various services, such as the daily cleaning of property/rooms, daily changing of bed linen and bath towels, luggage storage services, the providing of crockery, tableware and kitchen appliances, and sometimes, catering services. In this sense, the Rates of IAE classify in Group 68 of the first section, the “Hosting Service”. Within this Section is group 685 “Non-Hotel Tourist Accommodation”, which classifies the business activities of accommodation services, but those which are provided in establishments other than hotels and motels, hostels and guest houses, inns and boarding houses, apartment hotels, organised companies or agencies providing private apartments and campsites for tourists. Specifically, Group 685 includes accommodation services offered in country homes, holiday cottages and guest houses in rural areas, as well as youth hostels, flats and other similar premises that do not have the status of the previously listed establishments.
Furthermore, according to the attachment to Group 685, if the accommodation establishments classified in this Group are open for fewer than eight months a year, the charge rate will be 70% of the charge stated in the same.
On the other hand, and as established in letter F) of section 2 of rule 4 of the Instruction, taxpayers who carry out the activity of lodging services may provide, without paying any additional fee, complementary services, such as cleaning services, changing of sheets, internet, television, etc.
Consequently, group 685 of the first section of the IAE Tariffs classifies the activity of operation of non-hotel tourist apartments ( DGT V0215-18, DGT V0731-17).
Secondly , it is worth considering the assumption that said activity consists of renting out tourist apartments, which basically consists of offering a temporary accommodation service for short stays, generally to tourists, for a period of less than a year, and which normally involves providing some service such as changing household goods, cleaning the property upon entry and exit, etc.
This type of rental of housing for tourist or holiday purposes is classified in group "Non-hotel tourist accommodation" in the first section of the Tariffs, regardless of whether or not additional accommodation services are provided. That is to say, it is irrelevant whether customer service extends beyond the mere provision of the property, such as offering additional services such as offering breakfast baskets at no additional cost to the customer or providing occasional cleaning services, since the tourist purpose of the lease is clear and takes precedence over other types of considerations. (DGT V0068-23).
We must not forget, once the activity has been classified in its group or heading correctly, the exemption regime regulated in article 82 .1 c) TRLRHL, according to which resident individuals and taxpayers of Corporation Tax, civil companies and entities of article 35 .4 of Law 58/2003, of December 17 General Tax, with a net turnover of less than 1,000,000 euros are exempt from ##2## IAE ##2##
This exemption represents, for the purpose of this tax, the non-obligation of registering or paying the tax, regardless of the census obligations that may correspond to the taxpayer in accordance with the provisions of Royal Decree 1065/2007, of 27 July, approving the General Regulation of the activities and procedures of tax management and inspection and the development of common standards for the application of taxes, which is governed in the census obligations in chapter I of Title II of the Regulations.