British holidaymakers planning to visit Spain next year face higher accommodation costs after the Spanish government confirmed a new 10 per cent VAT charge on furnished holiday rentals. The tax takes effect from December 1, 2026, and applies to stays of 30 nights or less, unless the property is the landlord's usual residence.
Even if the owner provides hotel-style services such as cleaning, laundry, or restaurant facilities, the property will still be liable for the tax. Spain currently has around 500,285 short-term rental listings, all of which could become more expensive as a result of the increase.
Housing Crisis Context
The tax is part of a broader housing decree introduced by the Spanish government to address the country's housing crisis. Protests have erupted in cities including Madrid and Barcelona over the shortage of homes and the number of properties used solely for tourist accommodation. The issue gained national attention after the high-profile eviction of 87-year-old María del Carmen Abascal in Madrid, which sparked protests across the country. Spain is currently expected to have a deficit of 800,000 homes by 2027.
Additional Costs and Surcharges
The new legislation also grants town halls in designated housing pressure zones the power to impose an additional 50 per cent IBI property tax surcharge on residential properties used for tourist accommodation. This surcharge can rise to 100 per cent for owners with two or more such properties and 150 per cent for those with four or more.
Rupert Lee Browne, CEO of UK travel card company Caxton, told Metro how the tax might affect tourists. He said: "If the full 10% VAT is passed on to customers, a £1,000 rental would cost an additional £100, while a £2,000 booking would increase by £200. The actual impact will depend on the price of the property and how individual owners respond to the change, so there won’t be one universal increase for every traveller."
Rent Increase Caps Remain
Existing limits on annual rent increases remain in place until December 31, 2027, with increases capped at 2 per cent in cases covered by the rules, according to Spanish news site Majorca Daily Bulletin.
