How much tax do you pay on letting a parking space? Is VAT charged?

It depends on whether the space is let with a flat or on its own. If you let it together with the flat and to the same tenant, no VAT is charged and for income tax it is taxed as part of the letting of the home, with its allowance. If you let it on its own, VAT is charged at 21 % even if you are a private individual and for income tax it is taxed without any allowance. In both cases, what you receive less the expenses of the space is added to your other income and taxed at the rate that applies to your last euros.

Alburquerque Abogados

José Manuel Alburquerque
Landlord and tenant

VAT

  • The VAT exemption for homes extends to a garage and storage room let together with the home. The safest course is for the space to be included in the same contract as the flat, with the same tenant.
  • If you let the space on its own, or to someone who is not the tenant of the flat, VAT is charged at 21 %. It makes no difference that you are a private individual, because for VAT purposes anyone who lets a property is regarded as a business.
  • That obliges you, as with commercial premises, to register with the tax authorities, issue invoices and file a VAT return every quarter.

For example, if you let the space on its own for 100 euros a month, the invoice is for 121 euros. You pay the tax authorities 21 euros a month, 63 per quarter, less the VAT you have paid on the expenses of the space.

Income tax

  • You declare what you received excluding VAT and deduct the expenses of the space, such as its IBI (the local property tax), service charges and depreciation of 3 % of the value of the building.
  • If the space goes with the flat let as a home, it has, in principle, the same allowance as the flat, which for contracts signed on or after 26 May 2023 is generally 50 %. On its own, it has no allowance.
  • If the tenant is a company or a self-employed person renting the space for their business and pays you more than 900 euros a year, they will withhold 19 %. At 75 euros a month or less, there is no withholding.

The October 2026 decree does not change the VAT or the withholding on parking spaces.

This answer is provided for educational purposes and offers initial guidance on the question raised. Every matter has its own circumstances and nuances that require individual assessment. For that reason, before taking decisions with significant consequences, it is advisable to consult a professional and not to rely solely on this information. Personalised advice makes it possible to apply these explanations to the specific case and to assess the options available with greater certainty.