Spain's Proposed 21% VAT on Short-Term Rentals: What It Means for Landlords

For some time, the Spanish state and local governments have been trying to reduce the number of apartments offered for short-term rental, which increases the price of the apartments offered for long-term rental due to high demand and low supply.

In addition, the number of tourists is increasing yearly, negatively affecting residents' living conditions. The Spanish government proposed raising the VAT rate applicable to short-term rentals to tackle the issue more successfully.

Proposed Increase in VAT Rate

The government and residents agree that changing the tourism sector is needed to reduce housing market prices and help young people buy more affordable housing or rent apartments long-term under better conditions.

In previous years, many rules and regulations were changed to reduce the number of properties offered for short-term rental, from announcing that there will no longer be allowed to provide apartments for short-term rental in Barcelona to implementing more strict rules for obtaining necessary licenses for landlords.

The latest proposed regulation change is to impose a 21% VAT rate on landlords who offer properties for short-term rental. By increasing the applicable VAT rate, the government hopes to make short-term rentals less profitable for landlords and direct them toward long-term rentals.

In addition, the government has already imposed the obligation for landlords to register all their temporary and tourist accommodation, including rooms, on the so-called Digital Single Window for Leases government portal that will be developed and launched. If the landlords do not do this, they cannot advertise their properties on platforms such as Idealista, Booking, or Airbnb.

Conclusion

A broad fiscal package for 2025 discusses the proposal to increase the VAT rate on short-term rentals other than hotels. Although the aim is to reduce the number of properties offered for short-term rental and make housing more affordable, some opinions are that these expenses will just be transferred to tourists and that the measure will not give the expected results.

Nevertheless, the final decision on this proposal has yet to be made. Therefore, the implementation of the measures is questionable until the 2025 budget is adopted.

Source: The Local