Economic Activities Tax
article 78 of Royal Legislative Decree 2/2004, of March 5, which approves the consolidated text of the Law Regulating Local Finances (TRLRHL), defines the nature and taxable event of the IAE , establishing that it is a direct tax of a real nature, whose taxable event is constituted by the mere exercise, in national territory, of business, professional or artistic activities, whether carried out or not in a specific location and whether or not they are specified in the tax rates. For its part article 79 TRLRHL regulates taxed economic activity, stating that an activity is considered to be carried out with a business, professional or artistic nature, when it involves the self-management of means of production and human resources or one of both, with the purpose of intervening 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, of 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 in those, will give rise to the obligation to present 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 entitles, exclusively, the exercise of that activity, unless, in the Law regulating this Tax, in the Rates or in this Instruction, arrange something else.
Therefore, in accordance with rule 4.1 we must analyze the different possibilities within the tourist apartment rental activity 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. Thus, IAE rates classify in Group 68 of the first section,“Accommodation Services”. 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 in accordance with letter F) of section 2 of rule 4 of the Instruction, taxable persons who carry out the activity of hosting services may provide, without payment of any additional fee, complementary services, such as cleaning, change of sheets, internet, television, etc.
Consequently, group 685 of the first section of the IAE Rates classifies the activity of exploitation of non-hotel tourist apartments ( DGT V0215-18, DGT V0731-17).
Secondly, we must analyse the case in which a person or company, owner of a tourist rental accommodation, leases it to a business entity or an individual, who operates it as a Non-Hotel Tourist Accommodation and employs tour operators and/or personnel to manage it and assumes all the risks of the transaction. The person or entity that owns the tourist apartment carries out the property leasing activity classified in heading 861.2 of section 1 of the IAE “Rental of industrial premises and other NCOP rentals” (DGT V2540-08, DGT 1160-02).
Thirdly, we must study the case that this activity consists exclusively in the leasing for periods of time of houses or part of these, without providing any services associated to the accommodation activity and is limited to providing the property to the lessee. Thus, when this is the case, it is considered an activity pertaining to Epigraph 861.1 “Home Rental” of Section one of the Tariffs, and the owner of the activity, is obliged to register for and pay taxes on this activity. Notwithstanding the above, Note 2 of said Section establishes that "taxpayers whose contributions for this activity are less than 601.01 euros will be taxed at zero rate", in which case, in accordance with the provisions of Rule 15 of the Instruction, “taxable subjects will not pay any tax fee, nor will they be required to make any declaration” (DGT 1821-02).
In conclusion, the rental of flats or accommodation for weekends or for specific periods, without the owner of the rental activity providing any type of service to the tenant, constitutes an activity pertaining to Epigraph 861.1 of the Section one of the Tariffs, “Home Rental” (DGT V0898-17, DGT V0931-11 DGT 1482-02)
We must not forget, once the activity has been classified correctly in its group or heading, the exemption regime regulated in article 82 .1 c) TRLRHL, under which people are exempt from the IAE resident individuals and taxpayers of Corporate Tax, civil companies and entities of article 35 .4 of Law 58/2003, of December 17, General Tax, that have a net amount of turnover less than 1,000,000 euros.
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.