The recent ruling of the High Court of Justice of Madrid (TSJM) establishes an important criterion regarding the Personal income taxation of holiday rentals, especially relevant for owners in key tourist locations on the Costa del Sol, such as Malaga and Nerja. As lawyers specialising in national and international tax law, we explain in detail this judicial development and its implications.

Personal income taxation of holiday rentals: obligation even during vacant periods

One of the key issues addressed by the recent case law is the tax liability of owners when their properties remain empty. The TSJM clearly establishes that owners of properties for tourist use are obliged to pay personal income tax for the periods in which their properties are not occupied.

The ruling points out that, according to article 85 of the Personal Income Tax Law, the mere ownership of urban properties implies a potential capacity to generate income, which is why they should be taxed even if they are not actually occupied. In practical terms, this means that owners must pay tax on 2% of the cadastral value of the property, or 1.1% if this value has been updated in the last decade.

This is especially relevant for towns such as Malaga and Nerja, which have a high number of properties dedicated to tourism and where seasonality has a significant influence on occupancy, although it must be said that Malaga has become a tourist industry that is somewhat less affected by seasonality in recent years.

Find out which expenses are deductible in the spanish Personal Income Taxiation for customer service in your tourist accommodation, to optimise your IRPF declaration. The tax experts at Pérez Parras Economists and Lawyers in Malaga and Nerja, prepare your tax return in an optimal way, in accordance with the current legislation.

Personal income taxation of holiday rentals: deduction of customer service costs

Another key aspect for owners of tourist properties, clarified in the ruling, is the possibility of deducting certain expenses related to customer service. The TSJM has expressly validated the deduction in the tax return of moderate and proportionate expenses such as drinks, snacks, or specific decorations (e.g. Christmas trees), intended to enhance the customer’s stay and which are customary in the sector.

These expenses, according to the ruling, contribute to improving the customer experience and have a direct impact on the positive ratings and profitability of the tourism business. For owners in highly competitive areas such as Malaga and Nerja, this clarification is crucial, as it allows them to optimise the tax burden and increase the attractiveness of their tourist offer. We will advice you in the best way and will optimize your personal income taxation of your holiday rentals.

Conclusions

As a law firm specialised in tax law and holiday rentals, we recommend our clients in Malaga and Nerja to take the following measures:

• Periodically review the cadastral value of the property in order to correctly determine the taxable base for personal income tax.
• Record and retain itemised receipts for customer service expenses that are deductible on tax returns.
• To have specialised advice in tax law to ensure rigorous and optimised compliance with the tax obligations derived from the holiday rentals.

At Pérez Parras Economists and Lawyers we put our experience at the disposal of our national and foreign clients, offering effective solutions for the fiscal management of tourist properties in Andalusia. Do not hesitate to contact us to receive personalised advice adapted to your tax and legal needs.