How to Apply for a Touristic License to be able to Holiday Let your Property

This is an in-depth and up to date description of how to rent your property in the Canary Islands as a holiday let...

SAFELY AND LEGALLY - NO GREY AREAS - NO MYTHS - JUST PURE FACTS

This information is based on the latest rules set out by the Canarian Government and from having direct contact with members of local Government.

There are mixed messages all over the Internet about gaining these Tourist Licenses. So that you know, town halls ARE now processing AND ISSUING Tourist Licenses. 

In the Spring of 2015, the Canarian Goverment made clear their intentions to make everyone who lets out their property to tourists apply for a Tourist Licence. We have finally been able to obtain information from them as to what is involved and how the application should be made. As with everything in Spain, paperwork is the key. Please note that if your property is next door to a hotel you will not be granted the licence. Neither will it be granted should the community not issue you with permission to be able to rent out your property for touristic purposes.

It’s worth bearing in mind… Failure to adhere to terms set out in the Tourism Law are defined as “very serious”, and this band of criminal offences incurres fines ranging from €30,000 to €300,000. Fines for illegally renting out properties as holiday lets have already been issued around the 150,000 Euro mark. Tourism fines can be imposed both on owners and any agents acting on their behalf. Touristic Lets are considered to be stays for any length of time under 3 consecutive months. Therefore, any stay OVER 3 months is considered as long term and requires a Vivienda type of rental contract.

As an additional note: unlike when applying for an opening license for a bar for example, you MAY NOT rent out your property as a holiday while you are in the PROCESS of getting your Touristic License. The Touristic License must be obtained before renting out your property for Touristic purposes.

So how do you go about applying for a Tourist License?

Payment of our fees must be made up front. However, if you do not pass Stage One, the fees for Stage Two will be refunded to you, together with any supplied paperwork.

As you read through the list of requirements, you will realise that the inclusion of a technical architect is vital, we have our own in-house architect who speaks fluent English and will be able to provide the documents required.  

You must send the application to the local council (Ayuntamiento) in order to make your property legal for holiday lettings and is made in two Stages. The reason for doing this is to protect the clients from unwanted inspections by the tourist board and the tax office.

Stage One - Initial Assessment of the Property

We will require the following documents from the owner of the property.
1. A copy of the passports and NIE Certificates of all registered owners as stated on the Title Deeds (Escritura).

2. IMPORTANT: First Occupation License (Liciencia Primera Ocupación) OR Habitation Certificate (Certificado de Habitalidad). Some owners may already have these, some may have to apply for them. We can apply for these for you using our technical architect at an additional cost or you may apply for it yourself.

3. Your last Annual Rates Receipt (IBI – Impuestos Buenas Inmuebles).

4. Municipal Certificate (Certificado Municipal). TIBC are able to get hold of these through our contacts in the following town halls – All town halls (ayuntamientos) in Fuerteventura and in Tenerife – Arona, Adeje, San Miguel de Abona and Granadilla.

5. Certificate from Land Registry (Nota Simple). We will apply for this for you.

6. A copy of your Title Deeds (Escritura).

7. An authorization Letter from you to grant TIBC the permission to apply for a Tourist License on your behalf.

External costs of the First Stage of making your property legal for Touristic Letting purposes in the Canary Islands are as follows:
- Municipal Certificate €35
- Nota Simple €10
- The Habitation Certificate and First Occupation Certificate costs are dependent on the property and our technical architect may have to apply for these who will present you with a separate bill for each individual property.
- These external costs are non refundable.

Our charge for carrying out the first step of this process is €100 plus 7% IGIC (Canarian General Tax rate, our equivalent of VAT - Impuesto General Indirecto de Canarias).

Please take note, TIBC are one of the only places in the Canary Islands which can offer a LEGITIMATE license being issued and provide the optional backup services such as marketing, tax returns and insurance.

This applies to YOU whether your property is located in Tenerife (where we're based), Fuerteventura (where we have an agent on the ground... Shelagh, you're about to get a bit busy!) or any other of the Canary Islands.

External costs (non refundable) of the First Stage of making your property legal for Touristic Letting purposes in the Canary Islands are as follows:

- Application to the Town Hall €14
- Municipal Certificate €35
- Nota Simple €10
- The Habitation Certificate and First Occupation Certificate costs are dependent on the property and our technical architect may have to apply for these who will present you with a separate bill for each individual property.

Stage Two: Application for Tourist License

Once Stage One is complete, we will have a good idea of whether or not your property in the Canary Islands will be granted a Touristic License. If we think there is a good chance you will be granted a Touristic License, we will proceed on to Stage Two…

1. Enrolment in the Tax Office (Hacienda) and in IGIC (VAT).

2. We will need a Floorplan of your property (carried out by our technical architect if you do not have one).

3. We will need to apply from the local Town Hall (Ayuntamiento) for a Location Plan but at the time of this publication they were unable to give us a price for this. However, your title deeds may already include this.

4. Photographs of each room. Should you require professional photographs, this can be arranged and given to you which you can use in your future advertising campaigns.

5. Your home address, contact telephone numbers and emails.

6. The maximum occupancy of your property.

7. By what means do you advertise your property for rent? We will need details of each method of advertising as well as names of companies used. We highly recommend My Destination Tenerife to help promote your holiday rental.  They also build websites and produce marketing materials including virtual tours for holiday villas and apartments.

8. A price list which must include 7% IGIC (VAT).

9. We will need to see a copy of your House Insurance Policy. This is to ensure you have the correct insurance policy for holiday lettings. If not, TIBC can provide you with an accurate and safe policy, which will provide you with the correct cover needed for a holiday letting.

10. We will need a Power of Attorney (Poder) in order to present the documentation on your behalf. Or, you can let us know when you are available to come with us to the Town Hall so we can personally make the application with you.

11. Certificate from the community that you are allowed to holiday let (if a community exists). If the community prohibits the exhibition of a plaque, then this should be stated in the certificate.

12. A sworn declaration of responsibility, this can be made by the owner, or the letting agent.

Our fees for Stage Two of applying for a Tourist License for your property (not including external costs) will be €300 (plus 7% IGIC/tax).

Paying Taxes on a Touristic Let

As a result of letting the property to tourists, you will be required to make a quarterly return to the tax man. Tenerife International Business Centre SL can handle your tax returns for you. This will detail your income and expenditures (proof of expenditures must be provided. Every bill related to your property you receive must have your name, address and NIE number on it plus the name, address and CIF Number (tax number) of the supplier of the service.) Expenditures may only include anything that allows the property to be let. For example electricity bill, community fees, water bill, insurance, rates, taxes paid, repairs, telephone, Internet, etc.

So what now?

Should you wish to start the process of getting your proprety legal to rent out as a holiday let in the Canary Islands, an immediate payment of 473€ to TIBC will be required, but as stressed previously, should your property not pass Stage One, you will receive a refund of 321€.

Get in touch with TIBC now...

Potential Income from Renting out your Property as a Tourist Let in the Canary Islands

It could prove to be quite a lucrative venture! Below is a scenario of how much you could earn after taxes from letting out your property in the Canary Islands to tourists.

Based on a 3 Bedroom Villa in or near a Tourist Resort*

Income
Average Net price per week to your clients (not including 7% IGIC): €1,000
Average annual occupancy rate: 42 weeks

Average Annual Turnover: €42,000

Expenditures
Average Annual Utility Bills: €1,080
Commission to Letting Agent (3% used as example): €1,890
Community Fees: €1,440
IBI Rates: €400
Rubbish collection (Basura): €120
Repairs & Upkeep: €500
Telephone & Internet: €720

Total expenditures: €6,150

Income Tax payable
24.75% of (Income – Expenditures) = €8,872.88

Other Costs
Annual Fees for TIBC to handle your quarterly tax returns (Impuestos Trimestrales): €286.76 per registered owner.
Fees for TIBC to handle your annual tax returns (Impuestos Anuales): €71.69 per registered owner.

Total potential annual income from your holiday let in the Canary Islands = €26,618.67

*Please note, this is just a rough idea and is as accurate as we can make it. You may use these figures to apply to your own property.

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