Form 210 Rental Tax return - justifying expenses in Valencia

[Cameratrav]

Hi everyone from a newbie to this forum in my first year of renting my property. Forgive me if this has been answered before but I haven't read an answer to this so far on here. There is general agreement about doing the right thing and paying taxes, I certainly agree. I am an EU citizen and Non Resident in Spain so in theory I can offset all my expenses against tax. In practice it seems not as my local accountants say that every expense must be supported by a Spanish VAT/IVA receipt that is addressed to my rental business and quotes my NIF Spanish tax number. Electricity no, water no, internet no, insurance (UK based) no, community charges no, IBI no and so on. I can offset the accountant fees..... Is this the experience of others or am I being too pessimistic and those nice tax people will accept such as direct debit evidence from the bank? At least I am paying a rate of 19.5% and 19% next year, not 24.75%

I mention Valencia as the rules in regions vary, I am seeking to register which is becoming mandatory here, no tourist tax that I know of though? Many thanks. Richard

[kevsboredagain]

Sadly I live in Switzerland so am not allowed any expenses due to the lack an authority to force the Spanish to tax fairly so I'm clobbered with 24.75% on gross rental.

However, as an EU resident, you are allowed to deduct expenses that are directly related to the rentals. According to my accountant, the expenses must occur during the rental period, so electricity to run a pool pump is only allowed during the actual rental period. (Kind of hard to prove) Documents are required but not to the level you state. Insurance and local taxes are also deductible but only for the weeks rented. eg. rent 15 weeks/year and you can claim 15/52 of the local tax or insurance.

I would be looking for a new accountant or you could lose a lot of money.

[CSE]

Living and registered in Spain can confirm the following are need for tax returns.
The company runs the Casa Rural for us. We had to obtain a EU wide IVA number to be able to claim back VAT from other counties.
Yes your fiscal number must be on all receipts relating to the business.
The rest cannot be answered by us, as we are residence and run our business in a different way to you. Plus we live in a different

[costa-brava]

At the point of presentation of ALL tax forms in Spain THERE IS NO REQUIREMENT TO PRODUCE RECEIPTS OF ANY TYPE WHATSOEVER!!!!! In fact it is quite impossible to do so. The regulations are in place and most accountants, assesors or gestors will ask you to produce them but this is just to cover their backs. There is a remote possibility that your declaration will become subject to a detailed inspection but they just don't have the manpower.
Nearly all declarations are done on a form online and if this is not the case it is via a form that you (or your appointed agent) takes to the bank. Your receipts etc. are NEVER presented to the tax office unless they call them in for inspection. I have been here 30 years and I only know one person who had to do this and he is the owner of a chain of shops.
I am resident and have always done my own stuff but I recognise that this is not possible for the majority of people.
But at the risk of being shouted down again, I insist that it is best for everybody to get informed and if you are paying for an accountant etc. then he/she should be working for you. So many of them just take advantage of the blurr and confusion and tell you what suits themselves.

[Marks]

I have never been asked for receipts/proof of purchase for items I am claiming as expenditure. I do have all my utility bills, Wi-Fi, TV, IBI, community fee, maintenance, replacements bills/receipts etc etc going back years should anyone ask to see them. My view is, and IANAL, is that if you pay some tax and don't go overboard with deductions the taxman or taxwoman will go nowhere near you.

[Cameratrav]

Many thanks to all of you for taking the time to reply on a Sunday morning with such helpful information. I have already discussed with the accountants the option to use their help to get this set-up and then continue to make my own on-line returns. By the time I send the latest quarters figure to the accountants, I might as well submit direct as long as I know which boxes to fill on 210 each time. I can now go to see the accountants from a position of strength

One more related question please, after Form 210 is completed quarterly on-line, how is the tax due paid, will a direct debit have been set-up with the bank or will I need to make payment by bank card etc at the time?

Thanks again. Richard

[CSE]

two other things forgot to mention.
1) Keep your tax returns for 12 years (the law) and
2) there is no IVA (VAT) lower limit unlike the UK. (What is these days? 86K?).
IMHO ask professional advice about how you can claim this back for the Spanish state.
On a personal note over the years , especially since the banking crisis, the country is looking harder and harder for those who do not hammer tax out of the system. Maybe you can risk something once a upon a time but these days you have to ask yourself are you next to be inspected. This goes for all countries not just Spain.

[Marks]

there is no IVA (VAT) lower limit unlike the UK. (What is these days? 86K?)

Increased from £81,000 to £82,000 effective 5 April 2015.

[CSE]

That saves a lot of work on returns. Thanks marks for the info.

[kevsboredagain]

At the point of presentation of ALL tax forms in Spain THERE IS NO REQUIREMENT TO PRODUCE RECEIPTS OF ANY TYPE WHATSOEVER!!!!! In fact it is quite impossible to do so. The regulations are in place and most accountants, assesors or gestors will ask you to produce them but this is just to cover their backs.

Totally agree

[Cameratrav]

Thanks again for all the good advice offered. I thought it would be interesting to report on my meeting with the accountants who were a lot more accommodating than their first emails indicated. This is not directly from the tax office but hey, in the UK, you will get different interpretations of the rules from different tax offices!

Mostly the tax office does not want to see receipts for a 210 rental income return, but if they do then figures on a bank statement will suffice as evidence for Spanish expenditure against rental income such as community charges, local taxes, internet etc. We agreed a way of claiming for electricity and water, like other costs, claimed on a proportion for the number of days occupied. Marketing such as booking site fees was claimed. The income was taken as the actual income received, after commission or payment fees had been deducted.

The accountant did point out that 'major emergency' repairs needed while guests were staying only is claimable, e.g. a water heater failure in the middle of a stay. This does not include wear and tear or general replacements.

Overall the tax situation could be worse and I may achieve some rebate when the UK return is made for 2015/16. Of course the tax office could find fault with my return but hopefully not!

[costa-brava]

As the Goodies used to say (or sing): "goody-goody-gum-gums!!"
A nice result.

[CSE]

Thanks again for all the good advice offered. I thought it would be interesting to report on my meeting with the accountants who were a lot more accommodating than their first emails indicated. This is not directly from the tax office but hey, in the UK, you will get different interpretations of the rules from different tax offices!

Mostly the tax office does not want to see receipts for a 210 rental income return, but if they do then figures on a bank statement will suffice as evidence for Spanish expenditure against rental income such as community charges, local taxes, internet etc. We agreed a way of claiming for electricity and water, like other costs, claimed on a proportion for the number of days occupied. Marketing such as booking site fees was claimed. The income was taken as the actual income received, after commission or payment fees had been deducted.

The accountant did point out that 'major emergency' repairs needed while guests were staying only is claimable, e.g. a water heater failure in the middle of a stay. This does not include wear and tear or general replacements.

Overall the tax situation could be worse and I may achieve some rebate when the UK return is made for 2015/16. Of course the tax office could find fault with my return but hopefully not!

Thanks for reporting back. and giving what the tax office needs to see as evidence to prove expenditures.
A lot of the goods/services we purchase would not show up on a bank statement.
Interesting the accountants feel that wear and tear replacement purchases are not included in for deductible costs.

[Cameratrav]

A little more detail from the accountants, unlike in the UK, any start-up costs cannot be claimed, I bought new bedding, towels, outside furniture etc. In the UK you may also be able to claim about 10% of the income as wear and tear on the property, but not in Spain. I was allowed to claim for the Welcome Packs as that was essentially a purchase from the supermarket including any tax due.

As has been said before, there is a big cash economy here. A lot of the services we buy to support rentals if we are not present in Spain is without VAT/IVA receipts. Payment may come out of the bank as cash but can't be matched to a receipt if the tax office ever ask so I haven't attempted to claim for any such services that I might have used. But as has also been said on here before, in a way I have already had the tax relief on any such costs!

It will be interesting next year when I also have to report this new income source to HMRC in the UK to see how similar or different the final figures look.

What is good is that now I have agreed a format for presentation, it is quite easy to pull the figures together each quarter.

[CSE]

Excellent.
Again this may be a bit different as we live here. When asking for a quote we always ask if the price is with or without IVA. If it is essential for the business we ask for a price with. We are IVA registered.