Spain plans to raise VAT on tourist rentals to 21%

Anyone renting out a holiday home in Spain to tourists may be facing a substantial tax increase. The Spanish government wants to introduce a 21 percent VAT rate for short-term tourist rentals. It is one of the measures in a new housing package that also introduces stricter rules for temporary rental contracts and room rentals. The cabinet wants to finalise the plans in the coming weeks; parliament then still has to approve them before they take effect.

A housing package against the housing crisis

With the new package, the government wants to ease the pressure on the Spanish housing market. In many cities, popular coastal areas and on the islands, affordable rental housing is scarce. According to the cabinet, more and more homes are disappearing from the regular rental market because they are rented out touristically or temporarily.

The package consists of two parts. The first is meant to curb rental prices, give tenants more security and combat abuse in the rental market. It includes stricter rules for seasonal and room rentals, an improved emergency scheme for expiring rental contracts, the obligation to put rental contracts in writing, and tax benefits for landlords who lower the rent. The second part is meant to increase the supply of affordable housing — including the proposed VAT increase for tourist rentals, as well as measures to speed up administrative procedures.

VAT on tourist rentals

The most striking measure is the proposed introduction of a 21 percent VAT rate for so-called pisos turísticos: holiday homes rented out to tourists. With this, the government wants to end the tax advantage that this form of rental, in its view, has over hotels.

Prime Minister Pedro Sánchez announced the measure as early as the beginning of 2025, but the details remained pending until now. When the new rules will take effect is not yet known.

What does this mean for private landlords?

For many owners of a holiday home in Spain, this measure could have major consequences.

At the moment, many private landlords are exempt from VAT, as long as they only rent out the property. A key handover, bed linen on arrival and a final cleaning usually fall within that. Only when the landlord also provides hotel services — such as a reception, cleaning during the stay, changing bed linen or serving breakfast — does a 10 percent VAT rate usually apply today.

The government wants to change that. The plan is for much tourist rental to fall under the general VAT rate of 21 percent, even when no hotel-like services are offered. For many private landlords, that would be a far-reaching change.

Already renting out? Besides VAT, also keep your mandatory guest registration (SES Hospedajes) in mind — our check-in app handles it automatically.

Much still unclear

Whether this ultimately means that every owner who rents out a single holiday home touristically will have to pay 21 percent VAT is not yet certain.

The government has not yet published the final legal text. It therefore remains unclear exactly which forms of tourist rental will fall under the new rules and whether there will be exceptions.

Stricter rules for temporary rentals

In addition to tourist rentals, the government also wants to tackle abuse of temporary rental contracts. These contracts are intended for people who temporarily need housing, for example for work or study. According to the government, they are increasingly used to circumvent the rules for regular rental contracts. Temporary rental contracts must therefore always be put in writing, and there will be more scrutiny of their legitimacy.

Room rentals will also be regulated more strictly, because some landlords achieve higher income through individual rooms than by renting out a complete home.

What does this mean for tenants?

For people renting in Spain for longer periods, such as expats, students or temporary workers, the plans may actually offer more protection.

Written rental contracts should provide more clarity about price, duration and conditions. The government also wants to reintroduce a scheme allowing certain tenants to extend their expiring rental contract under conditions — an earlier version of that scheme failed to win a majority in parliament earlier this year. Landlords who lower their rent or keep it affordable may also qualify for tax benefits through income tax (IRPF).

What does this mean for holidaymakers?

For tourists, nothing changes for the time being. The plans are not yet final and the current rules remain in force.

If the VAT increase is ultimately introduced, it is likely that some landlords will pass on the higher tax, in whole or in part, in the rental price.

Not yet law

The plans are not yet law. The government wants to approve the housing package in the coming weeks through a royal decree. The Spanish parliament then still has to ratify the decree.

Only then will it become clear which measures will definitively be introduced, when they will take effect and exactly which forms of tourist rental the new VAT rules will apply to.