VAT on Short-Term Rentals in Spain: What the New Proposal Means (2025)

In May 2025, Spanish tax authorities proposed a major change that could significantly impact property owners offering short-term rentals. Under the new plan, VAT (IVA) at 21% would be applied to tourist rentals, even if no additional services are provided. This would mark a shift in how Spain treats platforms like Airbnb and Booking.com. Here’s what it means for landlords, investors, and non-residents.

The Current Situation: VAT Exemption for Tourist Rentals

Until now, short-term property rentals in Spain have generally been exempt from VAT, provided the property is rented without hospitality-style services (like daily cleaning or breakfast).

That meant most Airbnb-style rentals were outside the VAT system.

What’s Changing in 2025?

The Spanish government is proposing:

• A 21% VAT on short-term tourist rentals (stays under 30 days)
• Applies even when no services are offered
• Focused on municipalities with more than 10,000 residents

This aims to level the playing field between hotels and private rentals while addressing the housing shortage in high-demand cities.

Key Implications for Property Owners

1. VAT Collection Requirement

• Landlords would need to charge 21% VAT on the rental price
• File quarterly VAT returns (Modelo 303)

2. Right to Deduct Input VAT

• Owners could deduct VAT paid on:
  • Purchase of the property
  • Renovations and furnishings
  • Utilities and professional services
• This can significantly offset costs for those who recently invested in rental properties

3. Administrative Burden Increases

• Registration for VAT purposes required
• Regular bookkeeping and declarations

Who Is Affected?

• Spanish residents and non-residents who rent out property for short stays
• Owners using Airbnb, Booking, or similar platforms
• Properties located in urban or touristic areas with over 10,000 inhabitants

Long-term rentals (over 30 days) or rentals with tenants using the home as a primary residence are not affected.

Opportunities and Strategies

If the measure becomes law, it opens the door to strategic tax planning:

• Buyers may reclaim 21% VAT on newly acquired properties for rental
• Switching to long-term rentals could avoid VAT but reduce short-term gains
• Proper VAT planning could enhance ROI for serious investors

When Would This Come Into Effect?

As of now, the proposal is not law, but legal and tax experts expect fast-tracking due to housing policy urgency. A final decision may come later in 2025.

How Taxadora Can Help

At Taxadora, experts in spanish tax forms, we help Spanish and foreign property owners stay ahead of tax changes. If the rules are implemented, our experts can help you:

• Register your VAT number
• Handle quarterly VAT filings
• Advise on VAT deductibility and rental strategy

Final Thoughts

Spain’s proposal to apply VAT to short-term rentals marks a major shift for landlords. While it introduces a new cost, it also offers opportunities to recover input VAT and restructure property investments smartly.

For expert help navigating the potential change, visit our blog or contact the team at Taxadora.