Saturday, July 30, 2016

Beating The Tourist Tax Deadline

The deadline for registering accommodation for the charging of the tourist tax is this Sunday (31 July). Earlier this week the tax agency reported that there was a total of 3,036 establishments of varying types that had been registered. Among these were 2,022 properties classified as legitimate holiday rentals. This regulated supply is reckoned to amount to some 8,000 properties, to which can be added the estimated 120,000 places (as opposed to actual properties) that are available from the unregulated supply.

The tax agency said that it expected there to be a rush of registrations in order to meet the deadline. If so, then this is going to have to be one hell of a rush. (The total number of establishments had, by yesterday, risen to just over 6,000.) In addition to villas, etc. not on the register, the number of various types of hotel that had been registered is surprisingly low. These are principally interior or rural hotels. If the deadline is not complied with, fines of 400 euros kick in.

The tax agency and the tourism ministry now say that they are willing to extend the deadline in certain instances. The federation of tourist holiday stays in Mallorca (meaning private accommodation for holiday rent) met with the government to seek an extension. It argued, among other things, that many of these properties belong to people from rural areas, such as elderly farmers, who are totally unfamiliar with the internet and for whom digital registration would be complicated if not impossible.

The thing is, though, how does the tax agency (or anyone else) distinguish between individuals who are internet savvy and those who are not? The deadline seems to in any event be too short, but this typifies the rushed way in which the tourist tax has been implemented without all the practicalities and logistics having been clearly thought through and been taken account of. The government seems desperate to ensure that it can exact as much revenue as it can from the third quarter of the year (which started on 1 July, the date of the introduction of the tax), but extending the deadline to, say, the end of August wouldn't necessarily prejudice anticipated revenues. The charging of the tax dates from 1 July, regardless of when a property is actually registered.

For some of these owners, who rent out perfectly legitimately and have been doing so for years, it is said that they are being confronted with embarrassing situations of having to request tax payment from guests who have been renting their properties year after year; they're like old friends. From next year they will simply be able to add the charge with the booking. It might increase the price, but it will be easier and will mean that the embarrassment is avoided. It is evident, though, that owners are preferring not to have to ask for the tax and so are paying for it out of their own pockets. Similarly, there are villa agencies doing the same. This is for a different reason: the sheer awkwardness of the logistics of collection.

The tax should never have been introduced mid-season and at such short notice - remember that there were only three months between final approval by parliament and its introduction. But no, the government was desperate and it has created complications it could easily have avoided.

Coming to all those unregulated properties, as we know (because the government has been telling us) there is a huge supply of mostly apartments slipping under the regulatory radar. There unquestionably is a large supply, owners having been seduced by the promise of riches from short-term tourist tenants. But I understand that something of a re-think is occurring. It's one thing making more out of tourists, it's quite another looking after the properties and maintaining and preparing them for quick turnarounds of occupants.

I know of cases where owners have decided to go back to renting out long-term instead. This may carry with it the rights afforded to tenants under law and it may also mean less total income, but it is also considerably less aggravation. Plus, and even for the unregulated supply, there is the threat of being found out and clobbered for the tourist tax as well as any other tax (and so also fine).

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