We explain the advantages of paying taxes under this special tax regime
Through this article we want to inform you of the main features of the special regime for companies dedicated to housing rental, which aims to promote companies that rent housing, and whose main tax incentive consists of a bonus of the full tax due that corresponds exclusively to the income derived from housing rental, provided that certain requirements are met.
Who can benefit from the special regime?
Companies whose primary, but not exclusive, economic activity is the leasing of residential properties located in Spain that they have built, developed, and acquired are eligible . This activity is compatible with carrying out other complementary activities, as well as with the transfer of the leased properties after a minimum holding period of three years.
A residential lease is defined as a lease of a habitable building whose primary purpose is to satisfy the tenant's permanent housing needs. Storage units and parking spaces (up to a maximum of two) are considered equivalent to dwellings, provided they are leased together with the dwelling.
To qualify the activity of renting housing as an economic activity, it is necessary that for its management, at least one person employed with a full-time employment contract is used.
What requirements must I meet to apply for the special regime?
– The number of dwellings leased or offered for lease by the entity in each tax period must be equal to or greater than 8 at all times, without a maximum limit. This requirement must be met throughout the entire tax period, so that even if the entity has this number of dwellings at the beginning of the period, if dwellings are transferred during the period that reduce the number of leased dwellings below eight, this tax regime cannot be applied in that period, even if that number is reached again at the end of the period.
– The properties must remain rented or offered for rent for at least 3 years. This period will be calculated based on the start date of the tax year in which the option for the special tax regime is communicated (if the rented properties were part of the entity's assets before opting for the regime) or from the date they were first rented (in the case of properties acquired or developed subsequently by the entity). All properties that meet this requirement may be transferred without losing the previously received tax breaks.
– Real estate development and housing rental activities must be accounted for separately for each property acquired or developed, providing sufficient detail to determine the income attributable to each dwelling, commercial unit, or independent registered property into which the building is divided. Separate accounting is not required for other properties that are not dwellings, nor for each property that is ineligible for the tax break.
-In the case of entities that carry out activities complementary to their main economic activity of residential leasing, the income eligible for the tax credit must represent at least 55% of the total income for the tax period, excluding income derived from the aforementioned transfers, or alternatively, at least 55% of the entity's asset value must consist of residential properties, whether leased or not, and be capable of generating income eligible for the tax credit. Tax periods in which the tax regime cannot be applied due to non-compliance with the 55% requirement are not included in the three-year period, even if the properties are leased continuously during those periods.
What are the applicable bonuses?
Entities that have opted to apply the special regime and that meet the above requirements will receive an 85% tax credit on the portion of the total tax liability corresponding to income derived from the rental of housing. This tax credit does not apply to income generated from the sale of housing and is incompatible with the reduction of the taxable base for the capitalization reserve in relation to the increase in equity resulting from the tax-eligible income.
The income eligible for the tax credit is rental income, which for each dwelling will consist of the total income received, less expenses directly related to generating that income and the portion of general expenses proportional to that income. If the rental income for a particular dwelling is negative, this will be offset against the positive income from the other rented dwellings.
Specifics regarding dividend distribution and the transfer of shares
In the case of dividends that come from profits generated in periods in which this special regime was applied, the dividend will also be included in the taxable base of the partner, and only 50% of the exemption may be applied to avoid double taxation on the amount of the dividend.
In the case of income derived from the transfer of shares in the capital of entities that have applied this tax regime and where the exemption of article 21 of the LIS is applicable, the part of the income obtained in the transfer that corresponds to undistributed profits of the investee entity that have enjoyed a bonus is reduced by 50%.
These particularities will only apply to the distribution of the dividend to another legal entity, not in the case of natural persons.
How can I qualify for the special tax regime for entities dedicated to housing rentals?
The application of this regime is optional, and will be applied after prior choice that must be communicated to the Tax Administration and will be applied in the tax period that ends after said communication and in the subsequent ones that conclude before the waiver of the same is communicated to the Administration.
Incompatibilities
If the entity is subject to any other special tax regime except for the tax consolidation, tax transparency, and mergers, divisions, asset contributions, share exchanges, and financial leasing regimes, it cannot opt for the special regime for residential leasing entities; the other special regime takes precedence. Furthermore, if the residential leasing entity meets the requirements to be considered a small business, neither regime takes precedence over the other, and the taxpayer may choose either one.
If you require further information or have any questions, please contact us via email at ambit@ambitassessor.com or at our offices.
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A graduate in Business Administration from the University of Barcelona, she continued her education with a Postgraduate Diploma in Accounting and Management Control from Pompeu Fabra University, and completed various courses in tax and fiscal matters offered by the Terrassa Chamber of Commerce, the Barcelona Bar Association, and the Center for Financial Studies. Before joining Àmbit Assessor in 2001 as a tax and accounting consultant, she worked as an administrative assistant at Caixa Manresa and Banc Sabadell and as a tax information call center operator at the Spanish Tax Agency. For three years, she served as treasurer of the L'Alzinar Recreational and Cultural Society, a position she held concurrently with her work at Àmbit Assessor.
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