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On Wednesday March 27th 2019, a Q&A organised by Airbnb and the Spanish Association of Tax Advisers, AEDAD, took place. We thought this might be useful to those of you who are residing in Spain, but would prefer to read the answers in English. To view this in Spanish, please click here or visit the Spanish Community Center.
In this session the AEDAF experts answered the most frequent questions about how to declare the income obtained through the platform. Here you have the video of the event from the Responsible Hosts page.
Together with the video we have shared an overview of the questions asked and their answers:
1 .Are hosts bound to report all income received from Airbnb?
AEDAF tax advisors:
Yes. All income received from the platform is subject to income tax. In general, the income received from Airbnb is subject to the reporting obligation.
2.Is there a minimum income exempted from income tax reporting?
The minimum amount exempted depends on the origin of the income. For example, if a person receives employment income from a single payer, the minimum exempted amount is 22,000€. If the income is higher than 22,000€, then it needs to be reported.
However, in the case of income received from the platform, there is NO obligation to report income if this is of 1,000€ or less. The obligation to report arises when all the income received exceeds 1,000€.
3.Then, if my only earnings are those received from the platform, and these don’t reach 1,000€, do I need to report this income?
But if you receive 900€ from the platform and 5,000€ from work, for instance, you will need to report all income because it exceeds 1,000€ altogether.
4.Is there a fixed rate I need to pay for the income received from Airbnb?
There’s no fixed rate, because the tax rate depends on the income of each host.
To avoid surprises, we recommend that you save between 20% and 30% of the income from each reservation. In any case, we encourage you to consult a tax advisor.
5.Do we need to pay taxes for all income received from the platform?
We need to differentiate the obligation to report from the obligation to pay. Yes, you need to report all your income from the platform, but taxes are paid in relation to the actual earnings.
Therefore, you should report your gross income but you can then deduct expenses connected with the rented accommodation.
6. And what type of expenses can we deduct?
Almost all expenses connected to the rented accommodations. First of all, the Airbnb fee (VAT included), but also community expenses, IBI, assurances, supplies, repairs, etc.
In addition, you can deduct the depreciation of the property and common items such as furniture, mattresses, etc.
When deducting expenses, circumstances as whether you are renting out your entire home or only a room, should be taken into account as expenses should be apportioned according to the rented area and days.
Recommendation: keep all invoices of expenses connected with the accommodation, and a tax advisor can advise you on what expenses can be deducted and in what amount.
7. Does the 60% deduction for home rental apply?
No, not in this case. This deduction only applies for rentals under the Urban Leases Act (LAU) and for minimum periods of time, that currently is on 5 years.
8. I am the host but I share part of the income I get from rents with another person. Should I report this income or should each of us report the amount we receive?
The income must be reported by the holder of the right over the property. In case we are renting out an entire apartment, reporting should be done by the owner. In case of a rented apartment, reporting should be done by the renter that is in turn renting out the property (entirely or rooms). And this, regardless of who receives the income.
9.Then, what happens when the host and the person receiving the income in the bank account are two different persons?
In this case, when the income is received by another person, we need to analyse why this other person is receiving it. Different circumstances may affect tax reporting so we always encourage you to consult a tax advisor.
We need to remember that as of January 2019, all intermediary platforms such as Airbnb have the obligation to share data with local Tax Authorities about transactions concluded on the platform during 2018 onwards
10. When you are a renter, how do you report your income received from the platform?
This is the case where the person renting out the accommodation is not an owner but a renter. Basically, the renter reports in the same way as if it were the owner: gross income minus deductible expenses.
Yet, the difference is that if the host is the renter, he will report the income as “Capital Gain” (Rendimiento de Capital mobiliario) as opposed to the case when the host is the owner, that will report the income as “Rental Income” (Rendimiento de Capital inmobiliario).
Deducted expenses should be also reported as Capital Gain
11. How is reporting rental of a room different from reporting rental of an entire apartment?
The difference lies in the deductible expenses: when you rent a room you can only deduct them in proportion to the rented area, apart from considering the occupancy dates. When reporting rental income of an entire apartment, expenses are deducted only considering occupancy dates.
12. In case the accommodation rented out is not the habitual residence but a second residence, how is the income reported in this case?
It’s exactly the same: reported as Rental income and gross earnings deducting expenses.
13. Would sharing a room in the main residence affect the main residence exemption? Do we lose that exemption?
If the entire home is rented out, then the deduction is lost.
In case of a room or part of the residence, the Tax Authorities have clarified that the deduction will only be applied in proportion to the part that hasn’t been rented out.
14. I have a foreign friend that lives in Barcelona and also hosts, does she need to report her income in Spain?
Yes, she does need to report her income in Spain. regardless of whether the person is foreign or not, the obligation to report in Spain is determined by the habitual residence in the country. If a German resides in Spain and has an income, he will be required to report in the exact same way as a Spanish citizen that resides in Spain.
15. What happens in the case of a Spanish citizen who owns an apartment in Seville but resides in Germany?
If the owner or the renter resides outside Spain but has a property in Spain rented out in Airbnb, then he will report income taxes as a non-resident.
In any case, we recommend getting advice from a tax advisor since it will also vary depending on whether it is inside the EU or outside the EU.
16. Do we need to charge VAT to our guests?
If we are only renting out an accommodation, then NO.
If, besides accommodation, we are offering an additional service similar to those offered by hotels (meals, daily cleaning, airport pick-up, touristic services…) then you’ll need to charge separately VAT, in a percentage depending on the type of service you are offering and always complying with all formalities of this tax.
It should be stressed that if you’re only offering check-in and check-out cleaning, then this service is VAT exempt.
17. Considering that now Airbnb will be sharing with Tax Authorities information about transactions, will the income I received from Airbnb now appear in the income tax draft sent by the Tax Authorities?
We noticed that currently this information is not appearing in the income tax draft. However, this will depend entirely on the Tax Authorities and, in any case, it won’t affect the obligation of hosts to report their income received on Airbnb.
Even if the Tax Authorities would include the information regarding your earnings on Airbnb in the tax reporting draft, they will never include the possible deductible expenses and therefore these drafts will never reflect the actual income.
Again, due to the complexity of the topic, we recommend getting advice from a tax advisor. You will have access to the data base of professionals of AEDAF on www.anfitrionesresponsables.com and also on aedaf.es
18. If a host has been renting out his accommodation on Airbnb for some time now but hasn’t reported any of the earnings yet, can his situation be regularised? What happens if he doesn’t regularise his income tax situation
Of course he can and we must recommend that he actually does regularise his income tax situation.
Tax reporting can be done for the previous 4 years. Therefore, in general (as long as they didn’t get any warning and/or inspection), taxpayers can regularise their situation and duly report their earnings of years 2014, 2015, 2016 and 2017.
Regarding 2018, tax reporting should be done this year and until June 30, 2019.
Regularising tax income reporting implies presenting a complementary report, paying for the taxes that should have been paid and paying any applicable surcharge for not paying taxes on time (surcharge can be between 3.5% and 15% plus interest). However, not doing it may incur sanctions.
thank you all for this information, it has been very helpful. i am in the process of purchasing property in barcelona, do i need to get a business license in order to start hosting with airbnb??
Good question @Thomas1242. I'm going to send this over to the Spain team and double check this for you.
Speak to you soon.