The Tourist Rental Licence (VFT) in Andalusia for New-Build Owners

For foreign buyers investing in new-build properties on the Costa del Sol, Andalusia, understanding the legal framework for generating rental income is paramount. The Tourist Rental Licence, known as a Vivienda con Fines Turísticos (VFT) registration, is a statutory requirement for anyone offering their property for short-term holiday lets. Operating a tourist rental without this licence can lead to substantial fines and legal complications, making it a critical aspect of responsible property ownership and financial planning for non-resident and new-resident owners alike.

The Andalusian Tourist Rental Framework

Andalusia’s tourist rental sector is primarily governed by Decree 28/2016, of 2 February, on Tourist Housing in Andalusia, which has been subject to recent modifications by Decree 31/2024, of 29 January. This legislation integrates tourist accommodation into the regulated offer, aiming to ensure quality standards, protect consumer rights, and prevent illicit activities. The core principle is that any property offered for remuneration through tourist channels (e.g., online platforms, travel agencies) is considered a VFT and must comply with specific regulations.

Key Requirements for a VFT Licence

To successfully register a new-build property as a VFT, owners must ensure several key conditions are met:

• Licencia de Primera Ocupación (LPO): This is a fundamental document for new-build properties in Andalusia. The LPO, also known as a Licence of First Occupation or Habitation Licence, is issued by the local town hall and certifies that the property has been constructed in accordance with the building permit and complies with all urban planning, technical, and habitability standards. Without an LPO, a property cannot be legally occupied, connected to utility services, or, crucially, registered as a VFT.
• Energy Performance Certificate (CEE): All properties advertised for sale or rent, including tourist rentals, must possess a valid Energy Performance Certificate (Certificado de Eficiencia Energética). This certificate assesses the property’s energy efficiency and must be displayed in any advertising. Failure to obtain or display a CEE can result in fines ranging from €300 to €6,000.
• Community of Owners’ Approval: If the new-build property is part of a community (e.g., an apartment within a block or a villa in an urbanisation), specific regulations apply. From 1 July 2025, an express written authorisation from the community of owners is required to convert a property to tourist use. This approval must be granted by a qualified majority of at least three-fifths (60%) of both owners and ownership quotas. Without this consent, registration as a VFT will not be possible.
• Habitability and Safety Standards: The property must meet essential standards, including air conditioning in all bedrooms and living areas when rented between May and September, and heating when rented between October and April. It must also have a first-aid kit, complaint forms (Hojas de Quejas y Reclamaciones), sufficient furniture and equipment for its maximum capacity, and direct ventilation to the exterior in all bedrooms and living rooms.
• Maximum Capacity: The number of occupants is restricted to a maximum of 15 people. There must also be at least one bathroom for every four people.
• Public Liability Insurance: Owners must have appropriate public liability insurance in place.

The Application Process: Declaración Responsable

The VFT registration process in Andalusia is initiated through a ‘Declaración Responsable’, or Responsible Declaration, submitted to the Consejería de Turismo, Cultura y Deporte (Ministry of Tourism, Culture and Sport) of the Junta de Andalucía. This declaration is a formal statement by the owner asserting that the property meets all legal requirements to operate as a tourist rental. The process is typically electronic and requires a digital certificate.

Upon successful submission of the Declaración Responsable, the property is immediately registered in the Tourism Register of Andalusia and assigned a unique registration code (e.g., VFT/MA/XXXXX for Malaga). This code must be displayed in all advertising and promotional materials, including online platforms. It is crucial to understand that while registration is immediate, the administration may subsequently verify compliance. Providing incorrect information or failing to meet requirements can lead to sanctions and cancellation of the registration. Owners purchasing properties already registered as VFTs must also submit their own Declaración Responsable, as the licence is not transferable.

Tax Obligations for Foreign Owners

Foreign owners of new-build properties in Andalusia generating rental income are subject to specific tax obligations in Spain. Navigating these requires a clear understanding of non-resident tax laws.

Non-Resident Income Tax (IRNR) / Modelo 210

Non-resident individuals who own property in Spain and generate rental income must declare this income via the Impuesto sobre la Renta de No Residentes (IRNR), using Modelo 210.

• Declaration Frequency: Rental income is generally declared on a quarterly basis, within the first 20 days of April, July, October, and January, for income earned in the preceding quarter.
• Tax Rates: The applicable tax rate depends on the owner’s tax residency:
  • 19% for residents of the EU, Iceland, Norway, and Liechtenstein.
  • 24% for residents outside these countries.
• Deductible Expenses: For residents of the EU, Iceland, Norway, and Liechtenstein, various expenses related to the rental activity can be deducted from the gross rental income, such as property maintenance, utility bills, IBI (property tax), insurance, and depreciation. However, non-EU/EEA residents have historically not been permitted to deduct expenses, meaning their tax is calculated on gross income. A recent ruling by the Audiencia Nacional challenged this disparity, but the State Attorney’s Office has appealed to the Supreme Court, so the situation for non-EU/EEA residents regarding expense deductions remains uncertain and should be closely monitored.
• Modelo 210 for Non-Rented Periods: Even when the new-build property is not rented out, non-resident owners must declare an imputed income annually, by 31 December for the previous year, through Modelo 210, for the mere ownership of the property. This is a separate obligation from rental income.

Value Added Tax (IVA)

In general, the simple rental of a property for tourist purposes without additional services is exempt from IVA. Instead, it may be subject to Impuesto sobre Transmisiones Patrimoniales (ITP), though this is typically not applied to short-term tourist rentals.

However, if the owner provides services akin to those offered by the hotel industry, such as daily cleaning, laundry services during the stay, breakfast, or permanent reception services, then the rental becomes subject to IVA at a reduced rate of 10%. In such cases, the owner would need to register for IVA purposes and issue invoices with IVA.

It is important to note that discussions are ongoing regarding potential changes to IVA regulations for short-term tourist rentals. There are proposals that could lead to the mandatory application of IVA for short-duration rentals in certain municipalities from as early as 2025 or 2028, even without the provision of hotel-like services. These changes aim to harmonise regulations with European directives and could significantly alter the tax landscape for VFT owners.

Impuesto sobre Bienes Inmuebles (IBI)

The IBI is an annual local property tax levied by the local town hall. It is based on the cadastral value of the property, and the rate varies by municipality. All property owners in Spain, whether resident or non-resident, are liable for IBI.

New-Build Specific Considerations

For new-build owners, securing the VFT licence often involves a smoother process than for older properties, as new constructions are typically designed to meet modern standards.

• Licencia de Primera Ocupación (LPO): As mentioned, the LPO is essential. Developers usually obtain this, but buyers should always confirm its issuance and obtain a copy. Without it, you cannot legally use the property, including for tourist rentals.
• Developer Compliance: New-builds are often constructed within urbanisations with existing community rules. While the 3/5 approval rule for tourist use applies from July 2025, it is wise to inquire about any specific regulations or prohibitions regarding VFTs within the development from the outset.
• Early Planning: Prospective new-build owners interested in tourist rentals should factor in VFT requirements during the purchase process, discussing these with their legal advisors and potentially the developer.

Ongoing Compliance and Penalties

Once registered, VFT owners have ongoing obligations:

• Guest Registration: All guests must be registered with the relevant police authorities (Policía Nacional or Guardia Civil) within 24 hours of arrival. This involves completing a ‘Parte de Entrada de Viajeros’.
• Displaying VFT Code: The assigned VFT registration number must be clearly displayed in all advertising and at the property itself.
• Complaint Forms: Maintain official complaint forms (Hojas de Quejas y Reclamaciones) readily available for guests.
• Insurance: Maintain valid public liability insurance.

Failure to comply with VFT regulations can lead to significant penalties. Fines vary depending on the severity of the infringement, classified as minor, serious, or very serious. Minor infringements can incur fines of up to €2,000, serious ones up to €18,000, and very serious infringements, such as operating without a valid licence, can result in fines ranging from €18,001 to €150,000. In some cases, the Junta de Andalucía has cancelled VFT registrations and intensified inspections, particularly in areas with urbanistic restrictions.

Conclusion

For foreign owners of new-build properties in Andalusia, obtaining and maintaining a Tourist Rental Licence (VFT) is an indispensable step to legally and profitably offer their property for holiday lets. This process, while requiring attention to detail, ensures compliance with regional tourism laws and national tax obligations. Engaging with expert legal and tax advisors from the outset can simplify the journey, safeguard your investment, and ensure a smooth and compliant operation of your new Spanish property.