SPAIN Law and Practice Contributed by: Marta González-Llera, Toni Barios, Jorge del Castillo and Rafael Baena, Cases & Lacambra
6.7 Payment of VAT The lease of real estate is generally subject to VAT at a 21% rate. The lessor shall charge VAT to the lessee, who shall bear the VAT cost. However, residential leases are generally exempt from VAT. Commercial leases owned and leased by busi - nesses are subject to VAT at a rate of 21% if specific Spanish tax law requirements are met. 6.8 Costs Payable by a Tenant at the Start of a Lease Other costs payable by a tenant at the start of a lease are: • a mandatory rent deposit ( fianza ) borne by the tenant in an amount equivalent to one month’s rent for residential lease agreements and two months’ rent for non-residential lease agreements; • it is usual to undertake complementary guar - antees to secure payment of rent (under a limit in dwelling lease agreements); • although not obliged, the tenant may also subscribe to a home insurance to limit their liability in the event of any contingency; and • a tenant is obliged to declare the transfer tax to the region when formalising the lease con - tract, although it is exempt in some regions (eg, Madrid) if several requirements are met. 6.9 Payment of Maintenance and Repair The landlord is legally obliged to carry out the necessary repairs so that the tenant may con - tinue carrying out the activity for which the prop - erty was leased. Nevertheless, it is common that the parties agree that the tenant must repair any damage to the leased property resulting from normal wear and tear and perform any actions necessary to keep it in a good state of mainte - nance and repair.
In this sense, the rents to be applicable to new residential lease agreements in dwellings locat - ed in stressed residential market zones (dully declared) will be limited as follows. The new rent may not exceed the previous rent for a residential lease agreement that had been in force in the last five years in the same dwell - ing. Additionally, the new contract cannot fore - see new conditions that entail the charging of fees and expenses to the lessee that were not foreseen in the previous contract. The rent may only be increased by a maximum of 10% when the dwelling: • has been the object of a rehabilitation inter - vention in the two years prior; • has been the object of accredited acces - sibility improvement actions in the two years prior; or • when the lease contract is signed for a period of ten or more years, or a right of extension is established that the lessee may voluntarily exercise for a period of ten or more years. When the lessor is a large housing holder (an individual or legal entity that owns more than ten urban properties for residential use or a built-up area of more than 1,500 square metres for residential use, excluding garages and stor - age rooms), the new rent may not exceed the maximum limit of the price applicable according to the reference price index system, which will be calculated and published by the Ministry of Housing, based on the conditions and charac - teristics of the leased property and of the build - ing in which it is located. Likewise, when the property has not been sub - ject to any housing lease agreement in force in the last five years, the price reference index sys - tem will also be applied to set the maximum rent.
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