Is VAT charged on the rent of commercial premises? Even if the landlord is a private individual?

Question

José Manuel Alburquerque · Accepted Answer

Yes. The rent of commercial premises, an office or an industrial unit (warehouse) carries VAT at 21 %, even when the landlord is a private individual who lets only those premises, because for VAT purposes anyone who lets a property is regarded as a business. Only residential lettings are exempt, together with any garage and storage room let with the home. The landlord charges the tenant VAT on the invoice and pays it to the tax authorities every quarter. If the tenant is a company or a self-employed person, they can normally deduct it later in their own VAT return. Why VAT is charged even by a private individual The VAT Act regards as a business anyone who exploits an asset to obtain income on a continuing basis and expressly states that those who let property are businesses. A single property is enough. The tax authorities have confirmed this for a private individual who let commercial premises. The exemption applies only to properties let as homes and to what is let with them, such as the garage, the storage room or the furniture. What counts is the use, not the type of property: If commercial premises are let for the tenant to live in, the letting is exempt, provided that they are used only as a home and without hotel services. Whether the premises meet the conditions for living in them is another matter. If a flat is let as an office or a consulting room, it carries VAT at 21 %, because it is not used as a home. A garage or a storage room let on its own, or together with commercial premises, carries VAT at 21 %. How it is calculated VAT is applied to the rent and to everything the landlord charges with it, such as the IBI, the local property tax, service charges or utilities passed on to the tenant. No VAT is charged on the statutory deposit (the “fianza”). With a rent of 1.000 euros a month, the invoice is for 1.210 euros, 1.000 of rent and 210 of VAT. If the tenant is a company or a self-employed person, they will also withhold 19 % of the rent, 190 euros, so they will pay you 1.020. For a tenant who is a business or self-employed, VAT is not normally a cost, because they recover it. It is a cost for anyone who cannot recover it, such as a private individual who rents premises for their own use, for example as a storeroom. For the landlord, VAT is neither a cost nor income. Each quarter they pay over the VAT charged less the VAT they have paid on the expenses of the premises, such as repairs or the property manager. On their income tax return they include what they received excluding VAT. What the landlord has to do The landlord must register with the tax authorities before starting to let, issue an invoice for each rent payment and file a VAT return every quarter. The same applies to landlords who are not resident in Spain, who must also charge VAT. The October 2026 decree changes nothing about VAT on commercial premises.