10% VAT now on holiday homes in Spain

Spain approved a new housing decree in October 2026 which introduces a slew of significant novelties, including for short term rentals. Chief among them, short term rentals are now equated to running a business. This translates into a series of new tax and legal obligations for holiday home landlords.

This is done within the broader context of improving housing access conditions for Spanish natives. Housing has become Spain’s number one problem over the last three years, specifically since Spain’s Housing bill was enacted in May 2023. 

The government is of the view that short term rentals take away necessary accommodation stock that could be better employed in long-term housing contracts to accommodate families, instead of tourists. It also views holiday homes as waging unfair competition on the hotel industry, which calls for further regulation, including taxation. 

The Spanish government had long mulled the idea of levying a 21% VAT on holiday homes, spurred on by its junior coalition partner SUMAR and the hotel lobby. This had faced fierce rejection from opposition parties until very recently. However, a new turn of events- the high-profile eviction of an elderly lady aged 87, which made international headlines- prompted the government into swift action in the context of calling a snap election. 

Mercifully, the tax rate has been reduced to 10%, in line with the VAT applied to all hotel accommodations in Spain. Up until now, holiday home landlords were exempt from VAT unless they offered hotel-like services.

We have structured the article as an FAQ for ease of comprehension.

The legal and tax implications for landlords

Going forward, landlords offering short term rentals under 30 days are now required to file quarterly and annual VAT tax returns. 

This implies you will have to hire a quarterly VAT accounting service in addition to the two tax returns you should already be filing as a non-resident landlord:

• the annual non-resident tax return, or NRIIT, collected in December, and
• rental income tax, collected in January of each year 

When does the new tax obligation come into force?

It comes into effect on the 1st of December 2026. 

Tax rate applied

Section seven of the decree specifies a 10% VAT rate will be levied on guest invoices. Holiday home landlords will be required to raise invoices with VAT for accommodations whose guests spend 30 days or less.

Exception 1: renting your permanent place of abode

If you rent out your permanent place of abode, whether individual rooms or the whole property, it is VAT-exempt. For example, if you rent out one or more rooms in your main home, this would be VAT-exempt.

Exception 2: rentals exceeding 31 days

Rentals exceeding 31 days are VAT-exempt. 

However, the catch is that you need to formalise such rentals as either a:

1. Long-term rental, or as a
2. Seasonal let

As explained in a previous article, we believe long-term rentals are no longer advisable for landlords following the new regulation. 

As a gentle reminder, seasonal lets have a limited scope of use:

1. accommodation required for work reasons, or
2. a student let, or
3. medical reasons, or
4. looking to buy property 

If you offer a seasonal let and fail to justify any of the above four points, it will automatically be regarded as a long-term rental for all intents and legal purposes.

VAT tax calendar 

• Q1 January – March. Filed on the first 15 days of April
• Q2 April – June. Filed on the first 15 days of July
• Q3 July – September. Filed on the first 15 days of October
• Q4 October – December. Filed on the first 15 days of January of the following year

What happens if a landlord does not comply with filing quarterly VAT returns?

As explained above, holiday homes rented out for 30 days or less are now regarded by the government as a business. As such, you now have a legal and tax obligation to file quarterly VAT returns.

If you plan to continue offering holiday rentals (for periods of time shorter than 30 days), you must comply with the above or risk facing stiff fines. 

How our accounting service works

We email you a spreadsheet every tax quarter, which sections you need to populate and return to us by email. We then prepare your tax return as domiciled against your Spanish bank – no further action is required on your part.

When is the first VAT return due?

The first VAT return is due in January 2027, which taxes the previous month of December 2026. 

What happens if I only rent out a couple of tax quarters a year? Do I still need to file a return every tax quarter? 

The short answer is yes. Once enrolled in this VAT scheme, you must file a VAT return every tax quarter regardless of whether you rent out the property or not during the tax quarter. 

As explained above, holiday homes are now viewed by Spanish Tax Authorities as a business concern which triggers accounting, tax, and legal obligations for landlords.