How much tax do you pay on letting commercial premises?

For income tax it is taxed like letting a flat, but without the allowance, which only exists for homes. The expenses of the premises are deducted from what you received in the year (excluding VAT) and the result is added to your other income, at the rate that applies to your last euros. In addition, you must charge the tenant VAT at 21 % and pay it to the tax authorities every quarter, deducting the VAT you have paid on the expenses of the premises. If the tenant is a company or a self-employed person, they will withhold 19 % of the rent, which you will later deduct from what you have to pay on your income tax return.

Alburquerque Abogados

José Manuel Alburquerque
Landlord and tenant

How it is calculated for income tax

  • Income is everything the tenant pays you in the year, excluding VAT. If you have agreed that the tenant will pay you the IBI (the local property tax) or the service charges, what they pay you for them is also income. What you pay for them is deducted as an expense.
  • The other expenses are the same as for a flat, such as insurance, repairs, loan interest, the property manager and depreciation of 3 % of the value of the building. They are deducted excluding VAT, which you already recover in your VAT return. Interest and repairs are subject to the same limit as for a flat.
  • There is no allowance. All the net income, what you received less the expenses, is added to your other income and taxed under the income tax scale, the State scale plus that of your autonomous community.

An example

Using the scale for the 2025 income tax return, the latest to have been filed, an owner resident in Catalonia who lets commercial premises for 1.500 euros a month would pay the following:

  • Income for the year, excluding VAT, 18.000 euros.
  • Expenses of the premises, such as the IBI, service charges, insurance, the property manager and depreciation, 6.000 euros.
  • Net income, 12.000 euros, all of which is taxed.
  • If the rest of your taxable base, the figure on which the tax is calculated, is 40.000 euros, those 12.000 are taxed at 37,5 %, 18,5 % State and 19 % Catalan. That is 4.500 euros.
  • If the tenant is a company, it will have withheld 19 % of 18.000 euros, 3.420. On your income tax return you would have 1.080 left to pay.

VAT and other rules

  • VAT is neither a cost nor income for you. You charge it to the tenant and each quarter you pay over the difference between it and the VAT you have paid on invoices for the premises, such as repairs or building work.
  • What the tenant pays you for the IBI or the service charges also carries VAT.
  • For the days on which the premises are empty, the tax authorities treat 2 % of their cadastral value (the “valor catastral”) as income, or 1,1 % in many municipalities.
  • If the tenant assigns the lease of the business (“traspaso”) and you receive part of the price, that is also rental income.

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.