Who is responsible for retention tax and IGIC on rented business premises?

[Topacciolo]

Hi, I have a question:

At the moment I´m renting the place were i have my business. We have a contract and we pay every month our rent. Every 3 months i also pay a tax called Retencion and IGIC on the rent.
What i would like to understand is that RETENCION and IGIC are taxes that the landlord should pay or me as a business tenant? It was never very clear to me. The landlord since the beginning told us that we had to pay those taxes so it´s not something that came up unexpected but legally who is responsible for what? Someone told me that the retencion is a TAX the the landlord himself is paying because is renting a property. It´s not a tax that the tenants suppose to pay.

Can someone give a definitive answer on this?

Thanks

T

[AL JAY]

I think forum member Diane Goldenmaniac would be able to give you the correct advice on this!

[9PLUS]

The business is in your name so therefore you are responsible for both the Retention Tax and IGIC.

The Retention tax is normally deducted from the total rental sum.

[doreen]

As 9PLUS says, it is actually part of the rent you are paying .... except you as a business tenant are obliged to pay it over Hacienda as part payment of the landlord's tax bill. Something similar happens when a company employs a professional person (lawyer, architect etc) ... the retention tax is deducted from the invoice total prepared by the lawyer or whoever and the company must pay it over every quarter.

[bonitatime]

We pay IGIC to both our landlords
We pay the retención to Hacienda For one and to the landlord For the other
The reason for the second is they run a property rental business. They had to produce documentation for this
The IGIC maybe because we are retail small business who don't yet have to charge IGIC

[Goldenmaniac]

Basically the tax office doesn't trust the landlord to declare the rental income LOL!! so out of the agreed amount of rent you have to withhold (retain) the tax that would be payable on his income. It's the same thing that employers do on behalf of their employees they work for the tax man and deduct the employees income tax and then pay it to the government.
In the case of a Business rental (doesn't apply to homes or to Companies SLs etc) the calculation is like this;
Actual rent 900 euros
plus IGIC @ 7% 63 euros
Total owed 963 euros
of that you retain 21% x 900 euros = 189 euros (each month)
So you hand over 963-189= 774 euros to the landlord each month and then 3 x 189 = 567 euros each quarter to the tax office on a 115 form.

[Topacciolo]

Thanks Everyone!!! It´s finally clear!! Goldenmanic your Breakdown is great!!!



Thanks AGAIN to All!!!!