Spain has introduced a new 10% VAT on short-term property lettings that could affect thousands of holiday-home owners, including those who only rent out their properties occasionally.

The legislation is already in force, but parliamentary approval is still pending and important practical questions remain unanswered.

What do the new rules say?

The measure forms part of Royal Decree-law 29/2026, published on 7 October, which introduces a range of housing measures. Although the decree came into force on 8 October, the new VAT rules are scheduled to apply from 1 December 2026.

Under the legislation, furnished properties rented to the same tenant for 30 nights or fewer will attract VAT at 10%, even when no hotel-style services are provided.

An exception applies to accommodation in the landlord’s habitual residence. Longer lettings generally remain exempt unless hotel-style services are provided, in which case 10% VAT already applies.

Importantly, the new rule is based on the duration of the letting, not whether the property is officially registered as tourist accommodation.

What does this mean for property owners?

Until now, owners letting holiday accommodation without hotel-style services have generally been exempt from VAT. The new rules would change that.

An owner currently charging €1,000 for a week’s accommodation could have to charge €1,100 including VAT, or absorb the tax and accept lower net income.

But the implications go beyond pricing. Private individuals can charge VAT without setting up a company, but owners affected by the new rules would generally have to register for VAT purposes with the Spanish Tax Agency, normally using Form 036, and submit periodic VAT returns using Form 303.

That means more paperwork, record-keeping and potentially accountancy costs, even for foreign owners who only rent out their Spanish holiday homes for a few weeks each year.

On the positive side, owners charging VAT may be entitled to reclaim VAT on qualifying expenses, subject to the normal restrictions, particularly where properties are also used privately.

What remains unclear?

Although the basic tax obligation is established, several practical questions remain, particularly for occasional and non-resident landlords.

How will the new rules apply to bookings made, or deposits collected, before December? How will rental platforms and property managers handle VAT collection and invoicing? What specific guidance will the Tax Agency provide for private owners who have never had to deal with VAT before?

Further clarification would be welcome before owners are expected to comply.

Will the new VAT rules survive?

Nobody knows. The decree is currently in force but must be ratified by the Permanent Deputation of Congress, which is expected to vote on 12 November, ahead of Spain’s general election on 29 November.

An earlier version of the housing legislation was rejected by Congress on 2 October, so approval cannot be taken for granted.

If the decree is rejected again, the new VAT measures will fall away before their scheduled introduction on 1 December. And if the decree is passed but the Socialist party running the country in coalition with the hard left lose the next General Election due to be held on 29 November, an incoming rightwing government would probably repeal the decree.

For now, holiday-home owners should be aware of the potential changes and their implications, but there is still considerable uncertainty about what will actually happen.

We should know more after the parliamentary vote, assuming the Government’s latest housing legislation survives.