One of the most talked-about recent developments in Spain's legislative landscape may soon bring substantial changes to the holiday rental market: a proposed increase in VAT from 10% to 21% on short-term rentals.
On May 22, 2025, Spain’s ruling Socialist Party (PSOE) introduced a new housing bill in the national parliament. Among its most discussed measures is the proposed hike in VAT (known as IVA in Spanish) for short-term tourist accommodations. This would see the current reduced rate of 10% dramatically increase to the general rate of 21%.
Key details of the proposal:
The Spanish government's rationale behind this proposed change is multifaceted, aiming to address several key areas:
Levelling the Playing Field: To create a more equitable tax environment between the rapidly growing professional holiday rental sector and the long-established traditional hospitality industry (hotels, resorts, etc.).
Encouraging Long-Term Rentals: By potentially making short-term rentals less profitable due to increased tax, the government hopes to incentivise property owners to offer more long-term rental properties, easing housing pressure in popular tourist destinations and cities.
Increasing Tax Revenue: To boost the national coffers by tapping into the significant economic activity generated by the short-term rental market, which has seen exponential growth in recent years.
If this proposal is passed into law, the implications for both guests and property owners could be noteworthy:
For Holidaymakers: You might see slightly higher prices for short-term holiday rentals, as property owners adjust their rates to absorb or pass on the new 21% VAT. We understand that transparent pricing is crucial, and Prestige Villas is committed to ensuring you continue to receive the best value and service, regardless of regulatory changes.
For Property Owners: This would necessitate a review of your pricing strategies and potentially impact your net rental income. It also signals increased scrutiny and regulation of professional and non-professional rental activity across Spain.
It's crucial to remember that this proposal is not yet law. It must undergo the full legislative process within the Spanish Parliament. Given that the ruling Socialist Party does not hold an absolute majority, significant negotiations, debates, and potential amendments are highly likely before any final legislation is passed.
However, introducing such a bill clearly indicates a sustained and increasing regulatory focus on holiday rentals. This could be just the beginning of a broader wave of changes impacting the sector across Spain.
Whether you are a guest meticulously planning your dream Spanish holiday or a dedicated property owner navigating the evolving complexities of rental management, Prestige Villas is here to guide you every step. We proactively monitor this development and will provide timely, accurate, and actionable updates as the situation evolves.
Stay tuned for critical updates- we will publish further information as soon as significant developments occur. As always, please do not hesitate to reach out to the Prestige Villas team with any questions or concerns you may have. We are here to help you confidently navigate the future of Spanish holiday rentals.