Hi,
We let our property in Lanzarote through Airbnb. Until 2025 we did not have to register and account for IGIC (tax @ 7%) on our rental income in Lanzarote because the total annual amount was below the exemption limit of €30,000. From January 2025 the Canary Island authorities did away with the exemption limit for rental income and we have to account for IGIC on our rental income. My question is "what is the correct amount of "rental income" to be used when calculating the 7% Output IGIC?" Specifically, should the "rental income" include or exclude the "Host service fee" that is deducted by Airbnb before they pay the rental income into our bank account. For example if a guest pays Airbnb €1,080.00 plus a Guest service fee of €182.96, then we receive €1,041.13 (€1,080.00 less Host service fee of €38.87 (3% plus EU VAT @20%]. So - is the correct amount for calculating 7% IGIC €1,041.13 or €1,080.00? If anyone has received advice on this from the tax authorities in the Canaries or from a local tax adviser please could they share this.
(The figures above only refer to the Output IGIC. Input IGIC on allowable invoices has to be deducted to arrive at the net amount of IGIC to be paid over in each quarter. In other countries that operate VAT systems the Host service fee would be regarded as a "reverse charge" item to be included on both the output and the input sides of the VAT return but I don't know if the Canary Island rules do this?)
I'd welcome any ideas from members who have tackled this problem. Regards, Kathleen & Philip
