Spain plans to raise taxes on holiday rentals so that they pay “like a business”, Prime Minister Pedro Sanchez said on Monday, as residents of the country’s main cities grappled with soaring rents. The change is backed by the EU VAT in the Digital Age reforms, which includes the mandatory measure by January 2030 under pillar 3, Platform Economy.
Spain is keen to level the playing field for hotels, which must charge 10% reduced VAT rate. The Prime Minister also sees the tax measure as a way to increase the supply of properties for resident Spaniards.
Whilst the measure is mandatory for all 27 EU member states from 2030, countries my go early from July 2028.
Imposing VAT to shift housing shortage
Housing has emerged as a critical issue in Spain, where the nation faces the challenge of balancing its reliance on tourism—a cornerstone of the economy—with the growing problem of high rents. This issue is exacerbated by gentrification and the widespread conversion of residential properties into short-term rentals for tourists, which often offer higher returns for landlords. These trends are particularly pronounced in urban centers and coastal regions, where the demand for housing among Spanish residents frequently outstrips supply, leaving many struggling to find affordable and stable accommodation.
EU VAT in the Digital Age reforms