What the Spanish modelo 115 is: rent withholding, box by box

What the modelo 115 actually is

When a Spanish company or self-employed person rents a shop, an office or a warehouse, they do not hand the owner everything the contract says. They keep part of it back and pay that part to the Treasury on the owner's account. The modelo 115 is the document by which that money reaches its destination.

It is the fourth form in a small business's quarterly envelope, and the only one that looks at a landlord. The modelo 303 settles the VAT you charge your customers on the state's behalf. The modelo 130 advances your own income tax on your own profit. The modelo 111 pays over the income tax you withheld from employees and from the professionals who invoice you. And the 115 pays over the tax you withheld from whoever rents you the place where you work.

One practical consequence is worth fixing at the outset, because it changes how the rest of this article should be read: the obligation is yours, not the owner's. If you fail to withhold what you should have, the Agencia Tributaria comes to you for the amount, even where the owner received the full sum and declared the income on their own return. It is not a matter the contract can negotiate away.

The form covers three taxes at once, and that matters more than it looks: personal income tax where the landlord is an individual, corporate income tax where it is a company, and non-resident income tax where it is a permanent establishment. The three regimes do not say the same thing, and further down you can see exactly where they part.

The first question is not how much, it is who pays

Almost every page compresses this into the same sentence: homes carry no withholding and business premises do. The rule does not say that.

Article 75.2.a of the Spanish income-tax Regulation subjects to withholding the income arising from the letting or sub-letting of urban property «whatever its classification», and adds that references to letting are also references to sub-letting. It draws no line between a home and a shop at any point.

What decides the ordinary case is one article further on. Article 76 lists who must withhold:

• Legal persons and other entities, including residents' associations and entities under the income-attribution regime.
• Taxpayers carrying on economic activities, when they pay income in the course of those activities.
• Non-residents operating in Spain through a permanent establishment, and in certain cases without one.

A private individual renting a flat to live in does not appear on that list, which is why ordinary residential lettings generate no modelo 115. But a company renting a flat to use as an office does appear, and withholds exactly as it would on commercial premises. The right question is not what is being let, it is who signs the transfer.

There is a second condition that also gets skipped: the property has to be urban. Farmland falls outside article 75.2.a and outside article 61.i of the Corporate Income Tax Regulation, so letting it carries no withholding and belongs on no form.

The 19 %, the VAT, and the figure that is neither

Article 100 sets the rate in a single sentence:

The withholding to be applied to income arising from the letting or sub-letting of urban property, whatever its classification, shall be the result of applying 19 per cent to every concept paid to the landlord, excluding value added tax.

The two halves of that sentence pull in opposite directions, and that is where the most repeated cash error on the whole form comes from. Every concept widens the base. Excluding VAT narrows it. On a 1,000 euro monthly rent for business premises:

The figure that leaves your account for the owner is neither the rent nor the invoice total: it is a third one. The 190 euros are paid over on this form, and the 210 euros of input VAT are deducted on the same quarter's modelo 303, so the same invoice turns up on two different self-assessments for two different reasons.

The base does not hold the same things for both landlords

Here is a distinction the form's official instructions draw expressly, in two consecutive bullets under box 2, and which almost no guide carries.

• Where the recipient is a personal income-tax payer, the base is «the sum of the amounts of income paid to the landlord on every account, excluding value added tax».
• Where the recipient is a corporate income-tax payer or a non-resident with a permanent establishment, the base is «the full consideration paid by way of rent, excluding value added tax».

The difference between on every account and by way of rent is the service charge, the property tax and any works the contract passes to the tenant. They go into the base of an individual owner, and they do not go into the base of a company.

On an office at 1,000 euros a month with a 120 euro service charge passed on:

Same office, same invoice, 68.40 euros of difference a quarter because of one line in the instructions.

The five exclusions, and the two that exist only for companies

Article 75.3.g of the income-tax Regulation has three cases and only three. Article 61 of the Corporate Income Tax Regulation repeats those three word for word and adds two more.

The last two have no counterpart in the personal income-tax Regulation, and the second could not have one: an individual is never one of the fully exempt entities of article 9.1. So claiming either of them against an individual owner exempts nothing, and the withholding applies as usual.

The 900 euros are measured by year, not by quarter

The limit in article 75.3.g.2 is misread remarkably often. It speaks of rent paid by the tenant to one and the same landlord not exceeding 900 euros a year. Two points, and both change the answer:

1. Per landlord, not per property. Renting two parking spaces from the same owner at 40 euros each is 960 euros a year, and there is withholding.
2. A year, not a quarter. A 400 euro monthly rent is 4,800 euros a year, so withholding applies from the first invoice even though no quarter reaches 1,500 euros.

And there is a third consequence almost nobody mentions. Because this exclusion turns on an amount, it is the only one of the five that fits the nil-return case of article 108.1: having paid income subject to withholding without any withholding arising by reason of its amount. Under the other four, the rent leaves the duty to withhold altogether, no income subject to withholding was paid and nothing is filed. Under this one, you file in the negative.

Group 861 is the exclusion you do not decide

It is the most-claimed and the worst-evidenced.

The case requires two things: that the landlord is taxed under one of the epígrafes of group 861 of section one of the Spanish business-tax tariff, or another that authorises the same activity, and that no nil quota results. The quota of epígrafe 861.1, letting homes, and of epígrafe 861.2, letting industrial premises and others, is in both cases 0.10 % of the cadastral value of the properties let, and note 2 of both says the same thing:

Taxpayers whose quota for this activity is below 100,000 pesetas (601.01 euros) shall be taxed at a nil quota.

In other words, the exemption applies where the owner is large enough to pay business tax on their letting portfolio. But that sum is not yours to do: you do not know the cadastral value of every property that owner lets, and you have no way of finding out.

The third paragraph of the Order of 20 November 2000 solves the problem by turning it into a document. The landlord has to hand you a certificate from the Agencia Tributaria confirming that they are registered under one of those epígrafes, that no nil quota results or could result, and that they have not deregistered. The certificate is valid for the calendar year in which it is issued, unless the owner's registration status changes.

If you do not have that piece of paper in hand, the safe position is to withhold. The owner's word protects you from nothing, because liability for a withholding not applied stays with the tenant.

Ceuta and Melilla: two taxes, two sums, one building

The territorial reduction exists in both regulations, and it is not the same operation.

• Article 100 of the income-tax Regulation: the percentage «shall be reduced by 60 per cent» where the urban property is in Ceuta or Melilla, on the terms of article 68.4 of the Act. The 19 % becomes 7.6 %.
• Article 66.a of the Corporate Income Tax Regulation: where the income comes from letting urban property situated in Ceuta, Melilla or their dependencies and is obtained by entities domiciled in those territories or operating there through an establishment or branch, the percentage «shall be divided by two». The 19 % becomes 9.5 %.

On the same premises in Ceuta the withholding is 7.6 % or 9.5 % depending on nothing but whether the owner is a person or a company. And the corporate version additionally requires conditions of domicile that the personal-tax version does not ask for.

The boxes, one by one

The form has five settlement boxes and admits no reading other than that of its instructions.

On the supplementary return the instructions are strict and worth quoting: it is only available where a payable amount results and its purpose is to correct errors or omissions that produced a lower result than was due. In it, all the data of boxes 1, 2 and 3 are stated at their correct amounts and replace those of the earlier return entirely. Any correction in the other direction is not a supplementary return but a request to rectify the self-assessment, which is a different procedure.

The deadlines, and the five weeks that move July's direct debit

The seventh paragraph of the Order gives the first twenty calendar days of April, July, October and January, and provides no extension for the fourth quarter. The modelo 115 and the modelo 111 fall due on 20 January; the modelo 303 and the modelo 130 reach the 30th. Anyone filing all four has two different due dates in the same month.

Large businesses, in the narrow sense of article 71.3 of the Spanish VAT Regulation, file in the first twenty calendar days of each month, except the July period, which is filed during the whole of August plus the first twenty calendar days of September. And any deadline falling on a Saturday or a non-working day moves to the next working day.

On direct debit there is a detail that appears in no guide and that comes out of comparing two norms. The modelo 115 has no rule of its own, so annex II of Order EHA/1658/2009 applies, and its monthly list for this form includes August. Twelve windows for twelve monthly periods, each month covering the preceding one, so the July period's direct debit closes on 15 August, five weeks before the 20 September filing deadline.

The modelo 111 does have its own rule, article 3.2.a of Order EHA/586/2011, and that list leaves August out. Two forms in the same envelope, on the same filing calendar, with their July direct debits more than a month apart.

And the rent you withhold on can rise each year, subject to a cap

The withholding is calculated on what is paid during the quarter, so when the rent is updated on the contract's anniversary the form 115 base rises with it. How much it can rise is not decided by the contract alone: since 2023 the ceiling on the annual updating of a residential tenancy is the INE reference index, and for earlier contracts it is still the CPI. On a business premises, by contrast, there is no statutory ceiling at all, because article 18 of the Urban Tenancies Act sits in the title devoted to dwellings.

What does not belong on the modelo 115

The second paragraph of the Order expressly excludes sub-letting income from urban property that produces, for recipients who are personal income-tax payers, investment income. The Agencia Tributaria sends those cases to the modelo 123.

And in January, alongside the fourth quarter, the modelo 180 is filed: the annual summary listing each landlord with their tax number, the cadastral reference of the property let, what was paid and what was withheld. It carries one record per property with a different cadastral reference, not one per lease. The sum of box 3 across the year's four modelos 115 has to match the total on the 180, and the comparison is automatic.

Now do it with your own figures

The conceptual part ends here. What is left is arithmetic: how much is withheld on your rent and the charges passed on to you, how much actually leaves your account for the owner, whether any of the five exclusions reaches you, and what date you have depending on whether you pay by direct debit.