British holidaymakers planning to visit Spain next year face higher costs after the Spanish government confirmed a new 10 per cent VAT charge on short-term holiday rentals, effective from December 1, 2026.
The tax applies to furnished holiday rentals for stays of 30 nights or less, unless the property is where the landlord usually lives. However, if the owner provides hotel-style services such as cleaning, laundry, or restaurant facilities, the property will still be liable for the tax.
Spain has around 500,285 short-term rental listings, all of which could become more expensive due to the VAT increase.
Housing crisis prompts new levy
The tax has been introduced by the Spanish government in a bid to tackle the country's housing crisis. Protests have erupted in cities such as Madrid and Barcelona over the housing shortage and the number of short-term rental properties used solely as 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.
The new 10 per cent tax is part of a housing decree that came into force last week. The legislation also gives 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.
Impact on holiday costs
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."
He added: "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."
On top of the 10 per cent tax on tourist rentals, town halls in housing pressure zones can impose a 50 per cent IBI surcharge on residential properties used as tourist accommodation. This can rise to 100 per cent for owners with two or more such properties and 150 per cent for those with four or more.
Rent increase caps extended
Spanish news site Majorca Daily Bulletin reported that 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.
