Spain is introducing a 10% VAT charge on furnished holiday rentals for stays of 30 nights or less from December 1, 2026, unless the property is the landlord's habitual residence. Rentals where owners provide hotel-style services, such as cleaning, laundry, or restaurant facilities, will be liable for the tax.
Impact on British travellers
Spain welcomes some 19 million British visitors each year, making it the most popular holiday destination for UK travellers. The move could increase accommodation costs for visitors to Mallorca, Ibiza, the Canary Islands, and mainland Spain.
Spain has roughly 500,285 short-term rental listings split evenly between Airbnb and Booking.com, according to myDatavalue.
Reason for the tax
The Spanish government has introduced the tax to tackle a severe housing crisis. Locals in major cities including Madrid, Valencia, and Barcelona say they are being priced out by foreign investors, property funds, and the rapid growth of short-term holiday lets.
Spain faces a housing deficit of 800,000 homes by 2027, according to BBVA Research. In recent weeks, the country has seen massive nationwide protests triggered by the housing shortage, rental prices (which have surged 87% over the last decade) and high-profile evictions, such as 87-year-old María del Carmen Abascal, who became a national symbol of the crisis before her death on October 7.
Cost implications for holidaymakers
Rupert Lee Browne, CEO of UK travel card company Caxton, told Metro: '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.' Rupert says it's worth checking whether the quoted price includes taxes and charges before booking, and 'factoring accommodation into the overall holiday budget rather than looking at flights alone'.
He adds: 'For anyone paying for their trip in euros, it's worth considering the exchange rate and any fees associated with converting or spending money abroad, as these can affect the final cost of a Spanish holiday.'
Effect on Spanish tourism
Spain has long been, and is very likely to continue being, the top choice for British holidaymakers, Andrew Harrison-Chinn, CMO of travel platform Dragonpass, told Metro. He 'wouldn't expect an extra £90 or £100 alone to suddenly stop families going to Spain'.
What it could do, however, is make people more price-conscious about where they stay. For instance, a family 'comparing Mallorca, Malaga, Alicante or Valencia may increasingly look at the total cost of the trip rather than automatically returning to the same resort.' Andrew advises comparing the final price rather than the nightly rate to factor in the VAT, cleaning charges and other fees.
He recommends travelling outside of school holiday time where possible, being flexible on location and comparing flights across different airports as well as airlines. 'Spain has spent decades building its position as one of the easiest and most familiar overseas holidays for British families,' he adds.
So an additional accommodation cost is 'unlikely to change' British holidaymakers' choice of country, Andrew says, but rather how people go about booking.
