Agencia Tributaria Canaria statement on tax situation for private rentals under new Vivienda Vacacional Decree

The Canarian tax authorities have issued the following statement in response to numerous inquiries about Decree 113/2015 of 22 May, establishing the Regulation of Viviendas Vacacionales (vacation dwellings) in the Canary Islands, published in the BOC No. 101 of 05.28.2015:

Operating a Vivienda Vacacional, defined as temporary housing ceded to a third party in exchange for payment, and which has been marketed as holiday accommodation, is a fiscally regulated activity which is liable to IGIC. Therefore, anyone carrying out Vivienda Vacacional lets (whether the owner personally or those acting on his behalf) must comply with the following requirements:

– Register for IGIC (modelo 400)

– Issue an invoice for each let

– Apply 7% IGIC to the rental price, and specify this on the invoice.

They will also be subject to the requirements of IGIC registration, not least the obligations to submit quarterly IGIC tax returns (modelo 420), as provided for in Article 59 of Law 20/1991, of 7 June.

(For more about private letting under the Vivienda Vacacional Decree, see HERE).


  1. Author

    I will be removing (and have just done so) any posts insulting the Canarian government or comparing them to dictators. I am responsible for what appears on this website and this has been my policy even before the recent introduction of the security (so-called “gag”) law under which someone is at this moment being prosecuted for (in my opinion really comparatively mild) insults about the policía local on Facebook. This is a private website and there is no actual “right” for comments to appear. All comments appear at my discretion.

    On a different note, this post is about IGIC registration, and so I have moved several non-tax related comments to the general Q&A on Illegal Letting page HERE. To avoid confusion, I’m closing comments on this post.

  2. I think there is no doubt that the impetus for the enforcement of the Tourism Laws came from the Hotel Lobby (and a sympathetic Minister) claiming “unfair competition”: that the new regulations could somehow raise revenue is not the main driver.

  3. It would have been far more practical to assess the average tax due and then sell a licence according to bedrooms etc.
    They would have had money upfront each year as they renewed.
    It would be a cheaper way for them to raise revenue.

  4. I don’t really want to argue, Nova, but Janet’s original post was about clarifying the IGIC situation for those renting out under the VV decree, and nothing to do with illegal letting.

    The first comment from Tom was, I think, saying that IGIC should not apply and would cause problems and you brought up the subject of illegal letting by mentioning the possible fines. I believe my points are entirely relevant as I am merely agreeing with the original post that letting of any kind, including VV, is subject to the normal IGIC rules just like any other business. I fail to see how that is muddying any waters.

  5. We have rented rustic villa way off the tourist track throughout Europe from the owners direct and other sites.
    I would hope this new Law opens up our islands an awful lot of good people put in an awful lot of effort into promoting an alternative to the regular touist fodder.
    I We have stayed in some beautiful places not a greasy spoon amongst them.

  6. Author

    Because Owners Direct is primarily a foreign holiday property site, and all properties being let out under the VV scheme must be in non-tourist areas. I could well be wrong, but I don’t see the main market for VV lets to be foreign holidaymakers. It seems to me that the majority of (at least British) holidaymakers want to be in the Costa Adeje, or Los Cristianos, or Callao Salvaje, or similar. These places are explicitly excluded as areas for Viviendas Vacacionales because on their ayuntamientos’ PGOs, the area designation is touristic, or mixed.

  7. Why do you think the new VV will not be advertising on Owners Direct etc?

  8. You may be technically correct IP, but I think the points you are making are irrelevant and only muddy the water for others who are looking for clarity. The beauty (or curse if you’re on the wrong side of it) of the whole Vivienda Vacacional decree is that complying with IGIC and registering administratively as a VV (with a pretty plaque to hang on your building) are now neatly sewn in together. If you are conducting holiday lets without your plaque, you are operating illegally no matter how much IGIC you charge, pay and justify on pretty invoices, and so are subject to VV violation penalties of up to €300,000 just the same as if you were displaying the plaque without handling your IGIC properly, or indeed just letting willy-nilly as people are doing now. They’ve wrapped it in a neat little package with all the corners tucked in.

  9. Absolutely, Suzanne LePLa.

  10. IGIC paid on invoices should be offset against the IGIC charged on expenses incurred fees and other items.

  11. Author

    Nothing is “up in the air”. As I’ve said before, Tom, the areas are already defined, in the Ayuntamientos’ PGOs.

  12. Janet, Nova, I agree they have to charge the 7% IGIC but that can be in £ or € and indeed the renter should be told that IGIC is charged. There is no problem with that.

  13. Not in this context, Tom. Tax and IGIC must be charged/paid on any rental income no matter what tourist, non-tourist or illegal location the property is situated.

  14. When are they going to decide which areas are touristic/non touristic? Until they’ve been defined, it’s all up in the air anyway?

  15. Author

    Nova is absolutely correct. As I say in the post above:

    anyone carrying out Vivienda Vacacional lets (whether the owner personally or those acting on his behalf) must comply with the following requirements:

    – Register for IGIC (modelo 400)

    – Issue an invoice for each let

    – Apply 7% IGIC to the rental price, and specify this on the invoice.

    People can do what they like with Sterling or Euro charges, but anyone carrying out a VV let in Spain MUST register for IGIC and charge it, and issue a detailed invoice for it, said invoice forming part of a quarterly tax return for IGIC purposes.

    VV lets require owners to jump through administrative and now fiscal hoops in order to avoid fines of frightening and, in my opinion, life-changing amounts.

  16. Not entirely so, IP, since the VV decree requires that every tenant is issued with an invoice in which the IGIC is explicitly stated. If charging in sterling that could quickly become extremely complicated. You are correct that up until now the legality of letting has been a separate issue from tax, but the new VV decree pulls tax compliance into its own definition of a legal VV let.

  17. As I’ve said before the legality of the letting and the tax responsibilities are separate issues.

    If the owner is UK based, charges in Pounds, lets to UK based clients who pay in Pounds, and so where the transactions are essentially UK based, because the property is in Spain the owner still has to pay the relevant taxes in Spain due to an agreement between the UK and Spain. Of course he also has to pay the relevant taxes in UK but double taxation agreements mean he won’t have to pay twice on like for like charges.

    Since the VAT/IGIC threshold in Spain was reduced to zero a couple of years ago these taxes now include IGIC in the Canaries. It doesn’t matter if the IGIC is charged on top of the main price or is included in the main price so long as the taxman gets his cut he will be happy. And the owner doesn’t have to price in Euros. The £/€ conversion is done when the tax return is submitted.

  18. Though not registering may be a viable option for owners who can afford to pay the fines of up to €300,000.

  19. So, if you advertised on Owners Direct and charge in £’s, it’s still not workable?
    Why would somebody living in the UK want to charge in €’s which are fast becoming worthless, and add on 7% and exchange costs? It will just push prices up, so nobody will bother registering.

    1. Author

      Yes, it will be +7%, just as in any commercial establishment, e.g. hotels. The let is in Spain, and so subject to Spanish (or Canarian as appropriate) law and tax. Thing is, these VV lets are by law required to be outside of tourist areas – so is anyone going to be advertising them on Owners Direct or the like anyway?

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