Do you need to include IVA in your invoices to your tenants? Find out in what cases.
The Law 37/1992 regulating IVA (LIVA), on its article 20.1 lists out activities that are excempt from IVA. On the 23rd section, it mentions specifically the rental of buildings used for housing. It also specifies that it will not be exempt in cases when the renter is obliged to offer complementary services which would normally be offered in the hotel industry, such as restaurant, cleaning, laundry, etc… In this case, the renter is obliged to charge 10% (current value) of IVA on his invoice.
It is considered that cleaning services fall in the above-mentioned category when they are performed during the stay and not only before and after the occupation.
Having considered this, we will present here three scenarios, from the owner’s perspective:
The owner rents the property directly to the tenant or final user.
In this case what makes the difference, as mentioned earlier, is whether hotel-like services are offered or not. In the first instance, 10% of IVA should be added. In the second scenario, the activity is exempt from IVA.
If the owner has the obligation to include and collect IVA, he should report this obligation by proper registering (via modelo 037) and submit quarterly IVA payment (via modelo 303) and annual report ( modelo 390).
The owner rents the property to a company that will in turn rent the property as holiday lettings to the final users.
The owner should invoice the company with 21% IVA. This is a business rental and it does not fall in the category mention above of “building used for housing” as that is not the use given to it by the company.
This time it is the company who is renting it out for housing and will include 10% IVA or not depending on the services offered.
In this scenario, the owner, once again, needs to register and fulfill his IVA related obligations as an “IVA collector.”.
The owner rents the property to the final user by means of an agent (physical office or online intermediate).
This is a bit more confusing scenario because it resembles both of the previous cases. The agent here does not act as a rental business as it only puts in contact the two parties of the agreement.
Therefore, the owner will issue an invoice to the tenant for the rent with 10% IVA or not depending on the services offered.
The agent will issue and invoice to the property owner for the commission with the 21% IVA.