Changes in IGIC: A Turn in Vacation Rentals in the Canary Islands for Non-Residents.
Attention vacation rental owners in the Canary Islands! Since January 1st, 2024, the rules have changed, and it's important for you to be aware of how this will affect your finances whether you own a property or are a final customer.
End of Exemption for Non-Residents
One piece of news that has shaken many is that non-resident property owners with properties in the Canary Islands under vacation rental will no longer be exempt from the Canary Islands General Indirect Tax (IGIC). The reason behind this decision is clearly fiscal. The Government of the Canary Islands has decided to eliminate this exemption based solely on non-residency status, without providing technical reasons supporting the measure.
Impact on Overnight Stay Prices: How Does It Affect You?
If you own a property under vacation rental regime in the Canary Islands and do not reside there, prepare for changes in your income. Starting January 2024, you will no longer be exempt from the Canary Islands General Indirect Tax (IGIC), resulting in an estimated 7% increase in overnight stay prices. If you used to set certain prices, it will now be necessary to adjust your rates to adapt to this new fiscal reality.
On the other hand, if you are the final customer looking to enjoy a vacation in the beautiful Canary Islands, be aware that you may experience a 7% increase in accommodation prices. If you had budgeted a certain amount for your stay, it's time to reconsider and adjust your financial plans to face this tax change. Prepare for an adjustment in your vacation expenses!
Does It Incentivize or Disincentivize Investments?
The big question many ask is whether this measure truly benefits the Canary Islands. At first glance, it seems quite the opposite. Increasing accommodation costs doesn't appear to be the best way to attract investments. Undoubtedly, this decision raises questions about the long-term impact on the local economy and the overall attractiveness of the region for investors.
Final Conclusions
In summary, the new modifications to IGIC for non-residents with properties under vacation rental regime in the Canary Islands are generating waves of concern and questions. As we enter this new chapter starting January 2024, it's essential to be aware of how it will directly affect your finances and the attractiveness of the region for future investments. I'll be attentive to any further developments and will keep you informed. Prepare for these changes on the Canary horizon!
And if you need advice, don't hesitate to contact me by filling out the form.