The Spanish Government adopted Royal Decree-Law 29/2026 (Royal Decree), published in the Gazette on October 7, 2026, including the basis for applying VAT on short-term rentals. Currently, short-term rentals are exempt from VAT if the host doesn’t provide ancillary hotel-like services.
Published Royal Decree, through the lines of Article 7, stipulates that starting from December 1, 2026, short-term tourist rentals for 30 nights or less will be subject to reduced VAT at 10%.
Spain VAT on Short-Term Rentals
Currently, the VAT Law(Law 37/1992) exempts the rental of homes, including tourist accommodation, unless the property owner provides additional services typical of a hospitality business, and that includes cleaning of the accommodation unit during the stay, catering services, and other.
These services are taxed at the reduced rate of 10%.
Royal Decree adds a new set of conditions; if reached will trigger the imposition of reduced VAT on short-term rentals. If the conditions are triggered, the short-term accommodation rental becomes a taxable service, with all VAT compliance duties for the property owner, as a taxable person. Two conditions from the new scenario that make short-term accommodation rental a taxable service are:
- The stay of a single guest is less than the threshold of 30 nights, and
- The property is not the owner’s primary residence. If the property owner rents accommodation units from his/hers primary residence, the service is still exempt.
Spain is experiencing a housing crisis; the high prices of residential properties have skyrocketed, the quantity of long-term residential rentals is continuously decreasing, while the prices are rising. The government adopted a set of measures to combat the current status quo and to try to make long-term housing, or property buying, easier for residents.
VAT Compliance on Short-Term Rentals
With the introduction of the VAT on short-term furnished accommodation units, these accommodation services shall be treated from the VAT perspective in the same manner as hotels, just to mention one category of accommodation.
The property owners who rent the accommodation service, which, under Royal Decree, fulfills the conditions to be treated as a taxable service, should register for VAT in Spain and meet other requirements that come along with the provision of taxable services.
A taxable person should meet the following requirements to be seen as a VAT-compliant person before the respective tax authority:
- VAT registration
- VAT charging, collection, and remittance
- Issuance of VAT invoices
- Proper accounting framework
- Record-keeping requirements (fiscal supporting documents, VAT management for proper usage of input tax credits)
Regulatory Status
Royal Decree entered into force on October 8, 2026. However, before it becomes effective(December 1, 2026), it needs to be ratified by the Standing Committee of Congress within 30 days of its enactment.