If you’ve entrusted your property to a third party for Airbnb management, you might be wondering who holds responsibility for tax compliance, which tax bracket applies to your income, and when the property becomes subject to VAT.
The updated guide from the Independent Authority for Public Revenue (AADE) addresses these key concerns for short-term rentals, offering clear guidance on the legal framework, tax obligations, and responsibilities for property owners. One of the main areas of focus is what owners need to know when assigning property management to a company or another individual for short-term leasing.
Definition of a Short-Term Rental Property Manager
A property manager for short-term rental is defined as any individual, legal entity, or organization responsible for listing the property on digital platforms for short-term leasing and generally overseeing the rental process.
According to AADE’s guide, a “property manager” can be:
- The property owner
- A usufructuary (holder of rights to use the property)
- A sublessor
- A third party
If the owner, usufructuary, or sublessor delegates management to a third party for short-term rental purposes, they are required to submit a “Property Leasing Information Declaration” and include the details of the manager. Failure to submit this declaration will result in the owner being considered the default manager.
In cases of co-ownership, if one co-owner manages the property, the other co-owners are not required to submit a declaration.
Key Obligations for Starting Short-Term Rentals
Are you planning to rent your property short-term, either with or without the use of digital platforms? If so, you have the following essential tax obligations:
- Register with the Short-Term Rental Property Registry: This registry is maintained by AADE and is mandatory for all property managers.
- List the Property: Enter the property details into the Short-Term Rental Property Application on AADE’s website, which assigns a Property Registry Number (PRN).
- Display the PRN: The Property Registry Number must be visibly listed on all digital platforms and any other promotional materials.
- Submit a Short-Term Stay Declaration: For each rental, a declaration must be submitted by the 20th of the month following the tenant’s departure.
- Finalize Entries in the Registry: By February 28 of each year, you must finalize the entries in the registry for the previous year to calculate the taxable income for each recipient.
Income Tax on Short-Term Rentals
Income from short-term rentals of up to two properties is considered rental income, provided no additional services (except linen provision) are offered. However, income from renting three or more properties is treated as business income and taxed progressively from 9% to 44%, after deducting business-related expenses such as maintenance and improvements.
When three or more properties are rented by businesses or legal entities, the rent is subject to 13% VAT.
Important: For tax purposes, only properties registered in the Short-Term Rental Property Registry are considered short-term rentals, even if the owner has other properties rented out under traditional leases.
