As of 2023, changes in rents of non-residents of premises in Spain would have an impact on VAT
In Spain, the tax law has been modified in relation to the rental of premises by non-residents. From 1 January 2023, non-residents renting premises in Spain will have to pass value added tax (VAT) instead of their owners. This amendment is aimed at equating the tax treatment of the rents to which VAT is applied and those not. This article will detail the changes and implications that they will have for non-residents who wish to rent a premises in Spain.
If a Spanish citizen has an establishment in Spain and rents it to a company, he or she is in the position of having to apply the corresponding VAT. However, what happens if the owner does not reside in the country? Should this individual also apply the fee in question?
In Spain, the tax law has been modified in relation to the rental of premises by non-residents. From 1 January 2023, non-residents renting premises in Spain will have to pass value added tax (VAT) instead of their owners. This amendment is aimed at equating the tax treatment of the rents to which VAT is applied and those not. This article will detail the changes and implications that they will have for non-residents who wish to rent a premises in Spain.
Until 2022, in most cases, the non-resident was not required to include the tax in the final price. There was the case of ‘investment of the passive subject’, whereby it was the leaser who had to authorise the VAT when renting a premises. However, from 2023 this rule has changed and the non-resident leaser must include the corresponding VAT and pay it in Spain in all cases. Therefore, the leaser must obtain a NIF (if he does not have it yet) and submit his own VAT self-liquidations to the Spanish Treasury.
What does the amendment of tax law mean?
The amendment of the tax law in Spain in relation to the rental of premises by non-residents means that these will have to pass on VAT. Previously, it was the owners who had to apply this tax and then declare it and pay the corresponding amount to the public treasury. This change will take place from 1 January 2023 and will affect all non-residents who rent premises in Spain.
Who will this amendment to the tax law affect?
The amendment of the tax law will affect all non-residents who rent premises in Spain. This includes both natural and legal persons. It is considered not to be resident to anyone without tax residence in Spain. This amendment will not therefore affect tax residents in Spain.
How will VAT be calculated?
The VAT to be passed on to non-residents renting premises or floors in Spain will be calculated in the same way as the VAT on any other transaction. VAT is a tax that is calculated on the added value in each transaction and applied at each stage of the production and distribution of goods and services.
How will VAT be applied in renting premises for non-residents?
The VAT to be passed on to non-residents renting premises in Spain will have to be applied when the rent is paid. In other words, the tenant will have to apply the corresponding VAT rate on the amount of the rent and pay it to his renter.
How will this change affect existing rental contracts?
The amendment of the tax law will affect all rental contracts signed from 1 January 2023. In the case of existing holiday rental or rental contracts, the amendment will apply when the contract is renewed or an extension is carried out.
What happens if the tenant does not have the corresponding VAT?
If the tenant does not have the corresponding VAT, the leaser will be considered to have delivered services without applying the corresponding VAT. The leaser will therefore have to declare the corresponding amount and pay the VAT declared on income to the public treasury.
What happens if the tenant has no tax residence in Spain?
If the tenant does not have tax residence in Spain, he will have to appoint a tax representative in the country in order to be able to fulfil his tax obligations in contrast to the real estate residents in Spain. The fiscal representative will be in charge of passing on the corresponding VAT and making the declarations, payments and taxation to the public treasury.
How will this change affect rental prices?
It is possible that this change will affect the prices of rental premises in Spain. By passing on VAT instead of the owners, non-residents may choose to increase rental prices to offset the additional cost of the tax. It is therefore important for tenants to take account of this change when setting rental prices.
What measures should non-residents who rent premises in Spain take?
Non-residents who rent premises in Spain must take account of this amendment to the tax law and prepare to fulfil their new fiscal obligations. It is important that they are properly informed about the calculation and application of VAT in renting premises and that they appoint a tax representative if they do not have tax residence in Spain.
Conclusions
The amendment of the tax law in Spain in relation to the renting of premises by non-residents is an important measure in equating the tax treatment of rents to which VAT applies and those not. As of 1 January 2023, non-residents renting premises in Spain will have to pass on VAT instead of their owners. This modification will affect all natural and legal persons not residing in Spain who rent premises. It is important that non-residents are prepared to meet their new tax obligations and that they take account of this change when setting rental prices.
FAQs
- What is VAT? VAT is a tax that is calculated on the added value in each transaction and applied at each stage of the production and distribution of goods and services.
- Who is considered non-resident in Spain? Anyone without tax residence in Spain is considered non-resident.
- How will VAT be applied in renting premises for non-residents? The VAT to be passed on to non-residents renting premises in Spain will have to be applied when the rent is paid.
- What happens if the tenant does not have the corresponding VAT? If the tenant does not have the corresponding VAT, the leaser will be considered to have delivered services without applying the corresponding VAT.
- What measures should non-residents who rent premises in Spain take? Non-residents who rent premises in Spain must take account of this amendment to the tax law and prepare to fulfil their new fiscal obligations.