Know the law: short-term rentals in Spain

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When do you need a licence?
Regional specifics

In most Spanish autonomous communities, property owners require a special licence to set up short-term rentals. This licence verifies that a flat or house is fully equipped and satisfies the sanitary requirements set out by law. It is also necessary in order to make correct tax declarations: according to the Spanish government, the public budget comes up at about €2.9 billion short every year due to undeclared rental income. Another reason for introducing licences is to protect the hotel industry from private sector competition.

-> Airbnb: a game changer for the commercial property market

When do you need a licence?

Each autonomous community in Spain has its own legislation regulating short-term rentals. However, most regions comply with the following requirements:

Licence required	No licence required
Short-term detached house rentals with hotel services (B&B).	Short-term detached house rentals with no hotel services (cleaning only).
Flats located in building complexes for tourists, where the entire building or complex is used for this service, must be managed by professional service providers.	Long-term flat or home rentals (for terms over 1–2 months). Flats that are not in tourist complexes can only serve as long-term rentals in regions that don’t issue licences.

Short-term single room occupancy is prohibited in most autonomous communities. Property owners who rent out tourist accommodation for short periods must get a licence. Holiday rentals that require a licence meet the following criteria:

property classified as residential
rented out to tourists for short periods (from several days to one or two months)
rented using booking systems
advertised using specialised websites, platforms and apps (e.g., Airbnb, FlipKey, HomeAway, TripAdvisor, Tripping, VRBO, etc).

	Holiday rentals	Non-holiday rentals
Services	A range of hotel-type services including meals.	Cleaning only.
VAT	Owners charge tenants VAT which is further paid to the state.	Owners do not charge tenants VAT.
Advertisements	Services provided can be enumerated in the rental advertisements .	Indicating that the tenants will be provided with hotel-type services is prohibited.

In Spain, to get this licence, property owners must have a certificate of occupancy (Cédula de Ocupación or Cédula de Habitabilidad) issued when the building is commissioned. They must also meet specific criteria regarding the ventilation system, air conditioning, hot water, fire safety and furniture. Moreover, the home must be big enough to host the number of guests, all of whom must be provided with bed linen, and all household appliances must be in working order. If a building has more than four floors, it must have a lift. Flats and homes must have at least one bathroom with a shower, sink and toilet.

Registration fees (one-off cost) to apply for a licence range from €177 to €500. In some regions, like the Balearic Islands, it also depends on the number of guests the property is designed to accommodate. So, if a home is able to accommodate eight people, the fee is €24.84 per guest, making a total of €198.72. The licence is issued to a property, not to its owner, and is valid for six years (can be renewed).

The landlord must also have insurance covering issues like tenant health and injuries, property damage and burglary.

Regional specifics

Getting a short-term rental licence is obligatory everywhere except Castilla La Mancha, Castile and Leon, La Rioja, Murcia and Extremadura. However, authorities are planning to introduce similar legislation there as well. Licensing rules for this activity depend on the autonomous community.

Autonomous community	Law regulating the rental market	Date of introduction	Property registration organisation	Specifics
Andalusia (Andalucía)	Decree 28/2016 `	11 May 2016	Regional Government of Andalusia Ministry for Tourism and Sport	– Licences are not issued for flats rented out for over two months. – Owners of more than three flats located within the same building or within 1 km radius must register the properties as tourist apartments (apartamento turístico).
Aragon (Aragón)	Decree 80/15	5 May 2015	Virtual Citizen Care Office	– Maximum rental term is 1 month. – Single room occupancy is prohibited. – Owners of several flats located within the same building must register them as tourist apartments.
Asturias	Decree 34/2003	30 April 2003	Tourist Companies and Activities Registry of the Principality of Asturias	– Holiday homes (viviendas vacacionales) and country houses (casas de aldea) must be available for rent in July, August and September. – Single room occupancy and rentals for less than 30 days are prohibited.
Balearic Islands (Islas Baleares)	Decree 20/2015	19 July 2012	General Registry of Tourist Firms, Activities and establishments in the Balearic Islands, Island Council of Mallorca	– Maximum number of guests is 12. – Maximum number of rooms is 6. – Licences are issued for detached houses but not for flats and apartments. – Licence required to provide hotel services. – No licence needed for basic short-term rentals.
Basque Country (País Vasco)	Decree 198/2013	16 April 2013	Tourist Companies and Establishments Registry	– Maximum number of guests is 12. – Maximum number of rooms is 6. – Licences issued to owners of two or more properties only.
Canary Islands (Canarias)	Decree 113/2015	06 April 1995	Inter-Island Council (Cabildo Insular)	– Single room occupancy is prohibited. – Data on guests must be recorded by local police (Comisaría General). – Residential property located in tourist complexes can be rented out through an agent assigned to the complex (if the complex has a tourist licence). – In practice, licences are issued.
Cantabria	Decree 19/2014	19 March 2014	Department of Tourism	– Single room occupancy prohibited. – All types of short-term rental property must be registered. – Pensioners are not allowed to register short-term rentals.
Catalonia (Cataluña)	Decree 159/2012	20 November 2012	Business Management Office	– Stays of more than 31 days are not considered tourist rentals. – Owners can rent no more than two single rooms if living in the flat themselves. – Licence issuance for Barcelona suspended since May 2014.
Galicia	Decree 52/2011	24 March 2011	Department of Tourism	– Only homes can be rented out. – Maximum number of guests is 10. – Single room occupancy prohibited.
Madrid (Comunidad de Madrid)	Decree 79/2014	10 July 2014	Post office	– Minimum rental period is 5 days. – Single room occupancy is prohibited. – Property must have Wi-Fi.
Navarre (Comunidad Foral de Navarra)	Decree Foral 230/2011	24 March 2011	Department of Tourism	– Licences available for property classified as "country lodge" (casa rural) if built in traditional style and "tourist accommodation" (apartamento turístico / vivienda turística) if built in modern style.
Valencia (Comunidad Valenciana)	Decree 75/2015	03 July 2009	Department of Tourism or post office	– If managing five and more properties, it is necessary to register as a tourism company.

"Authorities in Barcelona stopped issuing licences in 2014. However, it’s still possible to set up a rental business by either buying a flat with a licence for short-term rentals or buying residential property without a licence and using it for long term accommodation", explains Alina Batyrshina, Tranio sales manager for Spain.

In most cases the registration process can take up to three months, during which the property can’t be advertised or rented out. Owners who violate local law are subject to a fine, which is determined by each autonomous community. In Andalusia, it ranges from €2,000 to €150,000 and from €9,000 to €90,000 in Barcelona. Owners must declare their rental income to local tax authorities and in the country of citizenship at the end of each year.

Rental income tax and other expenses

In Spain, property owners who run short-term rentals pay rental income tax at a rate of 24% for non-residents in 2016, taxed on their net returns. For example, if the annual rental income is €20,000, taxed at a rate of 24%, then the annual tax to be paid at the end of the year is €4,800. Owners can offset mortgage interest payments against their rental income (2–3% per year).

Property owners also pay municipal property tax. It varies by autonomous community from 0.405% to 1.166% of the cadastral property value. The tax amount usually ranges from €200 to €800 per year. In addition, owners of short-term rentals pay all the utility bills. Maintenance costs are about €2,500−2,800 per year on average.

The management company commission may become another expense if the owner does not manage the property independently. The fee is at least 5% of the rental income. In other words, if a property is rented out using a specialised website like Airbnb, commission is about 10%.

How much you can earn

Homes in Spain are rented out for €300–1,000 per day on average. If a property is rented out at €500 per day for 180 days a year, the annual rental income will be €90,000. Adjusted for taxation and maintenance costs the income will be about €65,600 per annum.

This article by Tranio.com is for informational purposes only. The regional legislation of Spain is subject to constant change and Tranio.com strongly recommends contacting certified lawyers and tax experts in Spain before deciding to purchase.

Yulia Kozhevnikova, Tranio