As we indicated at the beginning of the year 2024, the modifications possibly affecting the Holiday Rentals on the island would be a main topic.

Some commotion already started in January after a publication by the Canarian Government, https://www3.gobiernodecanarias.org/tributos/atc/estatico/publicacion/novedad/pdf/Cuadro_NOVEDADES_TRIBUTARIAS_2024_Ley_Presupuestos.pdf,

including the following wording:

“Since January 1, 2024, natural persons not established in the Canary Islands who start a business or professional activity cannot benefit from the REPEP, regardless of whether they carry out economic activities in other territories and regardless of the volume of their universal operations. “

This publication immediately caused a circulation of information telling the owners a holiday rental property, who do not have the fiscal residency in Spain, that starting from the 1st of January 2024 they would be excluded from the so-called “Régimen Especial Canario del Pequeño Empresario” o shortly REPEP (VAT excluded due to incomes < 30.000,-€ /year), and that starting from the 1th of January 2024 they would have the obligation to submit (an pay) quarterly VAT declarations.

LAJARES LAW OFFICES’ fiscal department decided to first take some time to fully study the matter, and to meet with several experts from the Canary Tax Agency and the Canary Islands Holiday Rental Association (ASCAV), before sending out any communications.

Today we are pleased to inform you that most of the previous information regarding the general VAT obligations for non-resident holiday rental owners which has been circulating over the last 2 months has not been correct.

The publication of the Canarian Government explicitly refers to the development of a business or professional activity. Regarding this, the rental activity of your own property, whether holiday or long-term, is not classified as a professional or business activity since its income is not taxed as income from economic activities but as income from “property gains.”

Besides this, the publication also literary mentions people “not established” in the Canary Islands. The fact of having a property in the Canary Islands which is the object of the rental activity breaks with the “not established” concept. For the Canarian tax office, the address of your holiday rental property in Fuerteventura is considered as a permanent establishment.

In addition to the previous point, we must clarify the difference between establishment and tax residence.  You have an establishment in the Canary Islands because your activity is carried out at the indicated address, but not tax residence since you do not spend more than 183 days overnight in Spanish territory.

The questioned REPEP fiscal regime has other requirements which must be carefully evaluated, but this has always been the case and are not affected by the recent publication.

Once more has been proven that ALL YOU NEED IS LAW.