Understanding the 2024 Tax Rules for Holiday Rentals in Spain

Many guests (and even some owners!) don't realise that if you own a holiday home in Spain, you must pay income tax on your rental earnings. The amount you pay, however, depends entirely on where you live.

This is a point that often causes confusion: your tax liability is determined by where you are a tax resident, not by the passport you hold.

For example, you might have an Irish passport but live full-time in the UK. In this case, you are a UK tax resident. As the UK is outside the EU, the Spanish tax authorities consider you a resident of a "Third Country." This distinction is critical.

EU Residents vs. Third Country Residents

The amount of rental income tax you pay, and what you can deduct, is different for EU vs. non-EU tax residents.

• EU Tax Residents:

  • Pay 19% tax on rental income.
  • Can deduct eligible expenses (e.g., cleaning fees, maintenance, utility bills, etc.) from their income before calculating the tax.

• Third Country Tax Residents (e.g., UK, USA):

  • Pay 24% tax on rental income.
  • Cannot deduct any expenses. The tax is calculated on the gross income.

Yes, you read that right. If you are a UK tax resident, a flat 24% of your entire rental income goes to the Spanish government, with no deductions allowed.

Top Tip for Guests: All things being equal, renting from an owner who lives in the EU might be cheaper, as their tax burden is significantly lower.

It's also worth noting that the days of not declaring this income are numbered. As of 2024, booking platforms like Airbnb and Booking.com are legally required to report all rental income for Spanish properties directly to the Spanish tax authorities.

The Big Change for 2024: Annual vs. Quarterly Submissions

So, what's the good news?

Previously, owners had to declare their income and pay taxes every quarter. This was often costly, as it meant paying an accountant or tax advisor (a gestor) four times a year, typically at around €100 per submission.

From the start of 2024, this has changed to an annual submission.

This means you only need to file one tax return for the entire year's rental income. For the 2024 tax year (Jan 1st to Dec 31st), you must submit and pay the tax due by January 20th, 2025.

This is a welcome change that significantly reduces the administrative costs of running a holiday rental in Spain—a saving which will hopefully be passed on to guests.

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