Many of our 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 applied for in the town hall. There are certain criteria that the villa needs to meet. More about this below.
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.
New changes to the rental laws in the Balearic Islands
Below is a summery of what I understand are the most important changes of the law that relates to tourist rentals in Ibiza.
These changes came into effect in August 2018.
1. The rental period for a tourist rental seems now to be maximum one month per client.
2. There will be a limited number of bedrooms assigned (as the hotels). This is not specified yet. This is to be managed by a “stock” of Touristic places in the hands of the Government, which are the ones existing plus the ones the government considers opportune.
3a. There will be zones that will classified as not suitable for tourism ( perhaps in relation to maximum density of the population – but these are not specified yet – the town halls will decide ) and therefore properties in these areas will not be able to apply for a license.
3b. We already know that protected rural land is already classified as not suitable for tourism and no new licences will be granted for properties in these areas.
3c. We also know that common rustic areas still will be suitable for tourism, so no problem there.
3d. Those properties that already have an existing license will not be affected either way.
4. Energy certification will be required, depending on the age of the property.(if before 31/12/2007 this will not be required).
5. It will not be possible to market properties that have had punishments for serious violations of the urban laws until these violations has been corrected.
6. Only properties with a valid “Cédula de Habitabilidad” or similar certificate will be able to get a license. The capacity of the occupants of the property has to correspond to certificate. 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.
7. The people staying in the property must be reported to the police – again like the hotels.
8. The rental property has to be minimum five years old – and in this period it must have been used privately.
9. An advertiser (rental agency) of a property without a proper rental license application or without using the tourism inscription number will be made responsible along with the owner. This can incur fines from 4.001 – 40.000 euros.
10. There has to one bathroom for every four beds.
Apartments will now have the possibility to obtain a rental license but only if the board of owners allow this.
1. Each license will have to renewed every five years.
2. The rental agent has to inform the clients in writing about the house rules and ensure they are understood and respected.
3. If the rules are not respected the rental agent has to require the tenant to vacate the property within 24 hours.
4. The owner has to have sufficient insurance to cover damages that the clients may cause to the community property.
5. There has to be a service number for the community open 24 hours.
New prices for the license
Cost for a rental license is now €600 for the application + the following per bed.
1 bed: €4.300,00
2 beds: €8.643,00
5 beds: €21.934,30
We will update this article as we learn more.
Please note that the laws in Ibiza change very often and although I have done all I can to correctly interpret the law the above is in no way full legal advice, but my interpretation of the law, and it does not substitute the legal report of a lawyer.