Increase in VAT for holiday rentals in Spain
June 2026
Are you prepared for a potential increase in VAT on Spanish holiday rentals? If you’re a landlord with a holiday home in Spain, you’ll need to be ready for this potential change in the law. Let’s take a look at what’s happening and how you can prepare your business.
Is Spain increasing holiday apartment VAT?
Unfortunately, at the moment, the answer is just maybe. In November 2024, the Spanish government proposed the introduction of IVA (VAT) at a rate of 21% on holiday rentals. At present, the proposal has the support of the governing PSOE party and their allies in Sumar. However, more politicians will need to agree to this controversial new tax before it can be passed into law.
If the government gets its way, you can expect to have 21% VAT on holiday rentals in Spain from 2025 onwards.
What are the current taxes on holiday apartments in Spain?
At present, the vast majority of holiday rentals in Spain do not pay any VAT tax. This is because they are considered to fit a different category from hotels. Legally, holiday rentals are not seen as providing the same level of tourist services.
Some holiday rentals offering a higher level of services do pay VAT. However, the VAT on this kind of holiday apartment in Spain is set at 10%. That’s the same rate that hotels pay. There’s a special, reduced rate of tourism VAT in Spain because the sector is so important to the country’s economy.
It’s also worth noting that although there is no VAT on holiday apartments in Spain at present, landlords are still taxed on their earnings through their personal income tax. This is one of the reasons why the proposed increase in VAT on holiday apartments is so controversial, as landlords feel that they will be effectively taxed twice if it comes to pass.
Why is Spain raising holiday rental VAT so drastically?
Over the past few years, many parts of Spain have been suffering from a housing crisis. The cost of rent in cities like Barcelona and Palma de Mallorca has shot through the roof, often pricing locals out of their own cities or forcing young people to remain living with their parents for longer. At the same time, these cities are hugely popular tourist destinations, and many properties are available for rent as holiday homes.
This has led to simmering tension between local residents and landlords who rent out holiday apartments. In 2024, large protests were held in many of Spain’s top tourist destinations, with residents waving banners demanding an end to Airbnb rentals.
Some specific cities and regions have introduced their own measures to tackle this issue. Most notably, the city of Barcelona plans to stop holiday apartments altogether within the next few years.
The central Spanish government has explicitly stated that their VAT increase is designed to make it less profitable for landlords to rent out their homes for holidays. Politicians hope that, by increasing VAT on holiday homes, more landlords will switch business models and make their properties available for long-term rent instead.
This is not the only new policy from the central government that affects holiday rental landlords. Spain is also set to introduce a national database for holiday rentals. You will need to register on the database before you can advertise your holiday home, and you’ll have to collect personal data from every guest who stays with you. There may be further new regulations introduced in your particular region, as holiday rentals have become such a contentious issue in Spain. As a landlord, it’s essential to keep up to date with the ever-changing law in this area.
How can a landlord prepare for the increase in VAT?
You might be tempted to remove your property from holiday rental portals and start advertising it to long-term tenants instead. However, this is not a decision to be made lightly.
Spain has incredibly strong tenants’ rights laws that leave landlords on the back foot in any kind of dispute. Most notably, it is extremely difficult to evict a tenant who chooses to stop paying rent. This has led to a huge problem with squatters in many parts of the country and is a major reason why many landlords turned to holiday rentals in the first place.
Refusing to pay the new tax is not an option either. Of course, tax evasion is never advisable, but landlords who are tempted to skirt the law must remember that, in Spain, holiday rental platforms report your earnings to the government. This makes it effectively impossible to avoid the increase in VAT.
How will the increase in VAT affect my business?
Naturally, seeing an increase in VAT will make your holiday rental business more expensive, essentially leaving landlords with two options.
Firstly, you can raise your prices to compensate for the rise in VAT. Of course, this passes the increase onto your guests. If you’re considering taking this route, do your market research first. Take a look at what other landlords in your area are doing. For instance, are property prices rising sharply? Keep in mind that guests may not be happy with the sudden rise in prices, and a large number may opt to vote with their feet, choosing alternative holiday destinations like Turkey, where accommodation is cheaper.
Secondly, you can lower your profit margins. You’ll need to crunch the numbers carefully before going down this route, and you might find that you need to raise prices slightly anyway to compensate.
Whatever option you choose, you’ll have to monitor your occupancy carefully to see if your business is still profitable over 2025.
How can I still attract guests to a more expensive holiday rental?
The government’s proposal is designed to take guests out of holiday rentals and send them back to hotels. You’re now competing with a cheaper class of accommodation, so how can you still turn a profit?
It’s worth considering the things that set your holiday rental apart from a hotel and highlighting them in your marketing. These may include a kitchen, space for large groups, a private pool, and so on.
You should also think about services you can offer that may entice guests. For example, introducing a later check-out time as standard won’t hurt your margins, but it can be extremely appealing to guests. You can also try to make deals with local businesses, which will allow you to provide well-stocked welcome packs or special prices for tours, attractions and restaurants.
The potential increase in VAT on Spanish holiday rentals won’t be easy, but it should still be possible for smart landlords to weather the storm and keep their business in profit.