New 10% VAT on short-term holiday rentals from 1 December 2026

Real Decree-Law 29/2026 of 6 October, published in the Official State Gazette (BOE) on 7 October 2026 and coming into force on 8 October 2026, introduces a change of particular relevance to owners and operators of properties used for tourist or short-term lettings in Spain.

From 1 December 2026, certain lettings of furnished flats and properties which until now were eligible for VAT exemption will be subject to VAT at the reduced rate of 10%.

What is changing?

Until now, as a general rule, the letting of a holiday property without the provision of services typical of the hotel industry was exempt from VAT.

The reform introduces an additional criterion based on the length of stay.

From 1 December 2026, lettings of apartments or furnished properties will be excluded from the exemption and subject to 10% VAT where any of the following circumstances apply:

• Where the landlord provides additional services typical of the hotel industry, such as certain regular cleaning, catering, laundry or similar services.
• The stay of the same tenant does not exceed 30 nights.

The new regulation thus treats a large proportion of short-term rentals in the same way, for tax purposes, as accommodation where services typical of the hotel industry are provided.

 

The exception: letting one’s own main residence

The regulation introduces a significant exception.

Rentals for a period of 30 nights or fewer will continue to be exempt from VAT when they take place in the flat or property in which the landlord themselves has their usual residence.

Therefore, not all short-term rentals will automatically become subject to VAT: it will be necessary to analyse both the duration of the stay and the specific characteristics of the property and the tenancy.

 

What does this mean in practice for landlords?

For affected landlords, the change does not simply involve adding 10 per cent to the rental price.

The effective application of VAT requires a review of the tax and administrative structure of the business.

Among other matters, it will be necessary to assess:

• The corresponding registration or amendment of the property details with the Tax Authority.
• The correct passing on of the 10 per cent VAT to the guest or tenant.
• The adaptation of invoices, contracts, booking systems and published prices.
• The submission of the relevant VAT self-assessments, normally using Form 303 where there is an obligation to do so.
• The possibility of deducting input VAT on certain expenses related to the business, provided that the general requirements set out in the tax regulations are met.

For VAT purposes, landlords are regarded as traders or professionals. Until now, those who exclusively carried out exempt lettings could be exempt from certain registration and return obligations; the loss of the exemption substantially changes this situation for the lettings concerned.

 

Particular attention should be paid to bookings made from December onwards

1 December 2026 will therefore be a key date for the sector.

Owners, operators and managers of holiday accommodation should review the following in advance:

• The rates advertised for the 2027 season.
• Bookings already made that relate to periods after the new tax rules come into force.
• The terms and conditions published on websites and booking platforms.
• Operating or management contracts between owners and management companies.
• The tax and invoicing settings on platforms such as Airbnb, Booking and other channels.
• The treatment of input VAT on expenses associated with the property.

It will be particularly important to determine whether the prices advertised to consumers have been agreed with VAT included or excluding VAT, as an incorrect contractual or commercial arrangement could result in the owner having to bear part of the new tax financially.

 

A significant change for holiday rentals in the Balearic Islands

The reform has a particular impact on regions with a high volume of holiday accommodation, such as the Balearic Islands, where a significant proportion of the activity involves short-term stays.

However, the national tax obligation must be analysed in conjunction with regional tourism regulations: the fact that a transaction is subject to VAT does not in itself mean that it is authorised from a tourism perspective.

The existence of a licence, DRIAT, tourism registration and compliance with the requirements set out in Balearic regulations remains a separate matter.

Recommendation: review each property before 1 December

 

The reform represents a significant change in the taxation of holiday accommodation, and it is advisable to review each property individually before 1 December 2026.

The duration of bookings, the operating arrangements, the services provided, the owner’s status and the way in which the property is marketed may affect the applicable tax obligations.

At ILLESLEX Abogados, we recommend carrying out this review in advance and adapting contracts, prices, invoicing and registration obligations before the new VAT regime comes into force.

 

Javier Blas Guasp

Managing Partner at Illeslex
Legal and tax advice on property and holiday rentals in the Balearic Islands.