Madrid is one of the large cities with the greatest increase in apartments for tourists. Here are the key characteristics of this social phenomenon and a practical detailed guide of the steps required to initiate the business of apartment rentals for tourists in compliance with the legal dispositions in the Autonomous Community of Madrid.
A phenomenon which is gaining growing interest is apartments for touristic use. Nowadays touristic activity represents 7.7% of Madrid GNP (124.780 million euros in January 2017): within this framework, the supply of apartments for touristic use in Spain has been overtaking the supply of hotels, due to several factors:
Increase in demand: aside from providing more privacy and flexibility, tourists tend to prefer having a whole flat at their disposal primarily because compared to a hotel stay it is normally cheaper.
Increase in supply: renting an apartment is a very well-paid activity, which turns out to be a huge advantage considering the financial crisis Europe is currently struck by. Moreover, if flats are rented out by using online platforms like Airbnb, the renting activity pays off for reasons other than making money: stays are normally short, resulting in the risk of deterioration being pretty much non-existent; payment is always made in advance. Finally, this system allows the landlord to get to know people from many countries, affording the opportunity to know different cultures and improve the language skills.
Apartments for touristic use in Spain are regulated by each the Autonomous Community differently as they have been delegated competences on the issue of touristic matters. We will now focus on the current legality applicable to apartments for touristic use in the Madrid Autonomous Community.
What is the legal framework concerning apartments for touristic use applicable to the Madrid Autonomous Community?
Decree nº 79 of 2014, of July 10, is the regulation currently in force in the Madrid Autonomous Community. In June 2017, a range of reforms in the field were announced, notably aiming at the introduction of the so-called Certificado de Idoneidad para Vivienda de UsoTurístico (Certificate of suitability for apartments for touristic use) and, more broadly, aiming at filling the gaps existing in the current legal framework. Such a certificate guarantees the client that the flat complies with a minimum of quality parameters established by law.
Which are the steps to rent an apartment for touristic use in the Autonomous Community and the City of Madrid?
The current legislation requires all apartments for touristic use to be registered in the Registro de Empresas Turísticas (Touristic Companies’ Registry), by submitting to the Dirección General de Turismo (Touristic Department of Madrid Autonomous Community) a Declaración Responsable de Inicio de Actividad de Vivienda de Uso Turístico (Affidavit of the legal representative of the start-up of activity).
By filing this Declaration with the Dirección General de Turismo (Touristic Department of Madrid Autonomous Community), the applicant is declaring that:
- The apartments complies with the parameters fixed by law.
- The applicant will notify the cessation of the activity as well as any change to the information declared in the Affidavit of the start-up of activity filed with the Dirección General de Turismo.
- The applicant holds all the permits and complies with the legality of any other public organisations or administrations.
- The applicant knows all the obligations set out for tourist companies by Article 12 of Rule 1/1999, of March 21, on Tourism Regulation of the Autonomous Community of Madrid.
By filing this Affidavit, applicant also needs to possess all of the following documents:
- The incorporation deed of the company and VAT number, as applicable, Spanish Identification number (D.N.I.), Foreign Identification Number (N.I.E.) or passport.
- Ownership title to the real estate (such as purchase deed, leasing contract etc.).
- Plan of the dwelling signed by a competent technician and stamped by the relevant professional association.
- Certificate of habitability.
- Energy efficiency certificate.
The application may be submitted, via electronic registry or in person, at any Registry Office of the City of Madrid, of the central state administration, of any other Autonomous Community, or of any city council of Madrid Autonomous Community which is part of the Red de Oficinas Integradas de Atención al Ciudadano (network of public attention offices), postal offices, and diplomatic representations or consular offices in Spain or abroad.
What taxes at applicable to apartments for touristic use?
Impuesto sobre la renta de las personas físicas (personal income tax): to be declared in two different periods during the same fiscal year:
- The period during which the real estate is rented. The rent, to be declared in full, will form part of the returns on capital assets; concerning the amounts spent on renting the flat, they may be subtracted proportionally to the duration of the renting period.
- The period during which the real estate is not rented and at full disposal of its owner, which will be declared as an imputed rent.
Impuesto sobre el valor añadido (value added tax): when real estate property is rented, the rent is exempt from value added tax. Therefore, if the owner only provides rental of the flat by interacting directly with consumers, the payment of such a tax is not required. In contrast, if during the stay the owner provides some side services which are provided in hotels as well, like food services, cleaning, laundry services or similar, these extra-performances are subject to payment of separate value added tax.
What consequences are set out by law if taxes are not paid?
Sanctions are established by Tax law if payment is not made. The fine can correspond to an amount from a minimum threshold of 3.000 euros to a maximum threshold of 300.000 euros, depending on the seriousness of the infringement.
If you are thinking of renting your apartment for tourist you may be interested in downloading this practical and detailed guide of the steps required to initiate the business of apartment rentals for tourists in compliance with the legal dispositions in the Autonomous Community of Madrid.
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