Renting out correctly in Mallorca: Everything you need to know

Holiday Rentals in Mallorca: No more than one month

In recent years, the surge in short-term rentals to tourists in Mallorca has led to significant regulatory changes.

Legislation and Licences:

Since 2012, properties in the Balearic Islands have been required to obtain a tourist rental licence to be rented out to tourists. As of 2022, tourism authorities in Mallorca have stopped issuing new holiday rental licences, although existing licences remain transferable to new owners. Renting  without the appropriate licence can result in fines of at least €20,001.

Inspections and Verification:

Inspectors regularly check licences, and tourists can use the online application “Holiday Rental Check Mallorca” to verify if they are renting a legally compliant holiday home.

Rental Requirements:

According to the tourism laws of the Balearic Islands, any rental of a  residential property for less than 30 days is considered a tourist (shortterm) rental, unless the landlord can prove to the tourism authority that the property has not been rented out to tourists on a daily or weekly basis. 
Generally, only houses as a whole or, in some areas, complete apartments may be rented to tourists, while renting out individual rooms is prohibited, with very few exceptions.

Marketing and Taxation:

Marketing through “tourist distribution channels,” such as online platforms, social networks, and agencies, is a key indicator of holiday letting. Owners of holiday rentals are legally required to collect the tourist tax from their guests and remit it to the tax authorities.

Taxes:

For non residents,  holiday rentals subject to VAT require the establishment of a permanent business, which generally subjects them to corporate tax regulations. The difference between holiday rentals exempt from VAT (which entail a much simpler tax regime) is determined by the services provided  during the guest’s stay, such as cleaning services.

Long-Term Rentals in Mallorca: Tax Advantage for Residents

Rentals longer than 30 days are subject to the Urban Leasing Law (LAU). 

According to Article 2 of the law:

“A tenancy for residential purposes is understood as the rental of a habitable building, the main purpose of which is to satisfy the tenant’s need for  permanent accommodation.”

Legal Requirements:

To comply with the law, several requirements must be met, such as paying a deposit of at least one month’s rent and signing a written rental contract. 

Both the owner/landlord and the tenants must fulfil certain contractual  obligations.

Taxes:

Long-term rentals are generally exempt from VAT. However, non-residents who rent out their apartment or house in Mallorca on a permanent basis must submit the Modelo 210 tax return on a quarterly basis. For residents, long-term rentals offer a significant tax advantage: 60% of the profit is tax-free.

Seasonal Rentals of Properties: Use for a limited period Seasonal rentals are also defined in the LAU (Article 3), but more succinctly  as “buildings that serve purposes other than those mentioned in the 
preceding article.”

Difference from Long-Term Rentals:

The difference to long-term rentals is that the tenant does not use the property as a permanent  residence. It is advisable to mention the main residence address in the  seasonal tenancy agreement.

Duration and Purpose:

Seasonal rentals are intended for a limited period, such as for seasonal workers or as longer-term holiday rentals. The purpose of the rental (seasonal work, study stay,  etc.) should be stated in the seasonal rental contract. Seasonal rental  contracts are more landlord-friendly than long-term leases. From a tax perspective, the same rules apply as for long-term rentals.

Balearic Villas: Your Reliable Partner for Renting in Mallorca

Balearic Villas specialises in exclusive properties for long-term and holiday rentals. If you own property in Mallorca and wish to rent it out, we would be delighted to advise you.