Special regime for entities dedicated to housing leasing

The special regime for entities dedicated to the leasing of housing is a tax framework designed to encourage investment in housing for long-term rental. Companies that opt ​​for this regime (optional) enjoy significant tax benefits, provided they meet certain requirements established in the Corporate Tax Law.

Below, the Puigverd Assessors team analyses the main characteristics and advantages of this regime from the point of view of the owner who manages a leasing company.

Requirements to be eligible for the special regime

For a company to benefit from this tax regime, it must meet a series of specific conditions, described in article 48 of Law 27/2014 on Corporate Tax:

• Main activity: The main economic activity must be the leasing of homes located in Spain. In addition, these homes must have been built, promoted or acquired by the entity. Tourist or seasonal rentals are not included here, as these are not considered housing rentals under the Urban Leasing Law (LAU).
• Minimum number of homes: The entity must lease or have available at least 8 homes and keep them leased or available for rent for a minimum of 3 years.
• Separate accounting: It is necessary to keep separate accounting for each dwelling, so that the income attributed to each one can be clearly identified.
• Personnel requirement: For the entity to be considered to have an economic activity, it is required to have at least one person employed with a full-time employment contract.

Tax benefits of this special regime

The main attraction of this regime is the possibility of accessing significant tax benefits that considerably reduce the company's tax burden:

• 40% bonus: Entities that opt ​​for this regime can apply a 40% bonus (until 31/12/2021 it will be 85%) on the full amount corresponding to the income obtained from the rental of housing. This reduces the effective tax rate from 25% to 15% (until 31/12/2021 it will be 3.75%).
• Super-reduced VAT: Entities that acquire homes for rental purposes can benefit from a super-reduced VAT rate of 4%, instead of the general rate of 10%. This is applicable provided that the income derived from these homes is subsidized.
• Compatibility with other tax regimes: ERAV is compatible with other tax regimes, such as tax consolidation, mergers and demergers, among others, which allows for more efficient tax planning.

Additional Tax Considerations

Despite the tax benefits, there are certain limitations and important considerations to keep in mind to avoid tax surprises:

• Dividends: In the case of distributing dividends from subsidized income, the double tax exemption only applies to 50% of the amount. This means that the distributed dividends will not benefit from the total elimination of double taxation, which may make this regime less attractive if the company plans to distribute dividends on a recurring basis.
• Wealth Tax: Shares in these entities may be exempt from Wealth Tax, provided certain requirements are met. This makes leasing companies an interesting option for owners looking to protect their assets in the long term.
• Personal Income Tax for Partners: In the case of individual partners, the dividends they receive must be included in the savings tax base for personal income tax. This may affect the individual tax planning of the owners.

The special regime for entities dedicated to the leasing of housing offers significant tax advantages for those investors who meet the established requirements. With a 40% bonus on corporate tax and a super-reduced VAT rate of 4% on the acquisition of housing, this regime is an effective tool for those seeking to maximize the return on their investment in the long term.

However, it is crucial to take into account the limitations, especially in relation to dividends and the impact on personal income tax, in order to carry out optimal tax planning. In addition, it is necessary to ensure that the conditions regarding the number of dwellings, duration of rental and hiring of staff are met in order to avoid tax penalties.