About 85% of the clients buying second homes in Ibiza are interested in letting their properties when they are not occupying them personally. The yields are very lucrative in the high summer season. A decent villa in a good location with pool and four or five bedrooms can easily fetch 8,000€ per week during peak season (July-August) and far more for a larger, luxurious property. To rent out officially you need a rental license which can be obtained in the town hall. There are certain simple criteria that the villa needs to meet. Attached houses and apartments can not get a license at present.
Tax on rental income in Ibiza
If you are resident in Spain and rent out your property long term, you can deduct your expenses (mortgage, maintenance etc.) – but only 40% of your final profit is taxable.
If you rent out per day, weeks or for just one month, you do NOT have the 60% deduction of the profit, but need to pay tax of the total profit.
The tax rate depends on your other income and goes up to 52%.
If you are a EU resident you CAN deduct your expenses and your tax rate is 24.75%.
If you are a non EU resident you CAN NOT deduct any expenses and your tax rate is 24.75%
No matter what status you have, if you officially offer other services in connection with your rental property – like daily cleaning, breakfast etc. – you are obliged to charge 10% IVA (VAT). If you do not offer any other services – you do not need to charge IVA (VAT).
For EU residents, the income would be taxable in the home country, but under the terms of the double tax treaty, any tax paid in Spain by EU residents can be credited against the tax due in the home country.
Touristic rental license
You need a touristic rental license to be able to rent you property out legally. At the moment licenses are only given to stand alone properties with maximum six bedrooms (however this might change soon and include properties that can sleep maximum 14 people) The license can be obtained at the town hall in Ibiza and the current cost is 600€.
It is now necessary to have a Cédula de habitabilidad for obtaining the license.
The Cédula de habitabilidad needs to be renewed every 10 years and is a small one page document that can only be obtained if the property has a “final de obra” or is totally legalised. In the past this was only obtained so water and electricity could be connected to the property – however now it is also necessary to apply for a touristic rental license.