Spain Set to Join Canada, US, France, Italy, Germany, Portugal and Netherlands in New Tourism Rental Clampdown With High VAT to Tackle Housing Squeeze

Friday, May 23, 2025

Spain is preparing to join Canada, the US, France, Italy, Germany, Portugal, and the Netherlands in a sweeping tourism rental crackdown by introducing a new twenty one percent VAT on short-term stays—a move aimed at easing the country’s deepening housing crunch by discouraging landlords from prioritizing tourists over long-term residents. With nearly half of homes in some regions now used for tourism or owned by non-residents, the Spanish government sees this high tax and tighter rules as a necessary step to restore housing availability and affordability in cities overwhelmed by visitor demand.

Spain is gearing up to take a bold step in its housing and tourism policy—one that’s drawing it closer to a growing list of countries that have already cracked down on short-term rentals. If passed, a new bill would slap a 21% value-added tax (VAT) on short-term tourist stays under 30 days—more than doubling the 10% rate that hotels currently pay.

That’s a big shift for a country where, until now, most tourist home rentals didn’t face VAT at all. The change wouldn’t just level the playing field between hotels and short-term stays—it would also shake up the entire rental landscape for cities already drowning in tourism while struggling to house their own people.

The proposal, introduced by Spain’s Socialist-led government, is part of a larger legislative package aimed squarely at easing the country’s growing housing shortage. According to a recent report from the Bank of Spain, there’s a shortfall of 450,000 homes, with pressure mounting fastest in tourist-heavy areas like the Balearic and Canary Islands. On those islands, about half the housing stock is either used for tourist stays or owned by foreign buyers who don’t live there full-time.

If the measure becomes law, it would directly impact an estimated one-third of the 94 million tourists who visited Spain last year and opted for home rentals over hotels. That’s millions of visitors who may soon find their vacation costs ticking upward, while the people who actually live in these cities hope for a little breathing room in the rental market.

But Spain isn’t acting alone—it’s following a clear trend already underway across both Europe and North America.

The Bigger Picture: A Global Push to Rein In Short-Term Rentals

Across countries like France, Italy, Germany, Portugal, the Netherlands, Canada, and the US, governments are stepping up their crackdown on short-term rentals—introducing higher taxes and stricter regulations to cool off overheated housing markets. Now, Spain is preparing to join that growing list with its own sweeping reforms.

In France, if you rent out a home professionally for fewer than 30 days, you’ll pay 20% VAT—and Paris caps primary residence rentals to just 120 days a year. Cross that limit, and it won’t come cheap—violators can be hit with serious fines that make cutting corners a costly gamble. In Germany, cities like Berlin have taken things even further by requiring landlords to obtain special permits for short-term rentals. Skipping the paperwork isn’t just risky; it can cost you big, with fines reaching as high as €500,000 for illegal listings.

Italy applies a 10% VAT to vacation rentals run as businesses and tacks on local tourist taxes. Portugal, on the other hand, has hit pause on new short-term rental licenses in high-demand areas like Lisbon and Porto, and applies a 6% VAT to tourist stays—part of a broader push to cool down overheated housing zones and reclaim homes for local residents.

Even the Netherlands, known for its tourism-friendly policies, is cracking down. Amsterdam limits rentals to 30 nights a year unless you have a special permit, and if you’re running a rental business, you’re on the hook for 21% VAT—the same rate Spain now wants to introduce.

North America’s No Loophole Zone

Across the Atlantic, cities in Canada and the United States have also had enough of housing being swallowed by tourist demand.

In British Columbia, short-term rentals are subject to multiple layers of tax, including provincial sales tax and municipal accommodation fees. The combined rate can reach 18% or more in some areas. And in cities like Toronto and Vancouver, you need a license to rent short-term—plus you’ll be hit with empty home taxes if your property sits unused for too long.

The US, while lacking a national VAT, uses hotel taxes to similar effect. New York City, for example, has enacted rules that have essentially shut down the majority of Airbnb-style listings unless they’re fully licensed. Other cities, like San Francisco, Honolulu, and Los Angeles, have introduced similar caps, permit systems, or outright bans on entire categories of short-term stays.

All these places are part of a growing realization: when every other apartment becomes a holiday home, people who live and work in these cities get pushed out.

A Fight Brewing in Spain

Back in Spain, not everyone’s on board. The country’s rental industry has pushed back hard. Apartur, an industry group based in Barcelona, called the proposed VAT rate “discriminatory,” arguing that it unfairly targets one segment of the tourism market while favoring traditional hotels.

In the Canary Islands, where tourist rentals already pay a 7% VAT, many property owners feel the new national rate would push small hosts out of the market entirely. Javier Peñate, a legal advisor for a local holiday homeowners’ association, warned the policy could “destroy” the sector: “The sole objective is to put tourism in the hands of big hotel chains,” he claimed.

And there’s another hurdle—the bill still needs to pass through a highly divided parliament, where the Socialist government doesn’t hold a majority. The politics could get messy, even if public sentiment is beginning to favor stronger housing protections.

What’s at Stake

For many in Spain, this isn’t just about taxes—it’s about taking back control. The idea that whole neighborhoods have become de facto hotel zones has stirred real anger, especially in cities like Barcelona, Madrid, and Seville where the cost of living continues to climb. Barcelona has drawn a firm line in the sand, announcing plans to completely ban short-term tourist rentals across the city by 2028—a bold move aimed at reclaiming housing for residents and pushing back against the pressures of mass tourism.

With tourists returning in record numbers, the timing feels urgent. And if Spain moves ahead, it will become one of the few countries to adopt such a steep VAT on tourist rentals nationwide—joining a select but growing list of governments treating housing as a public need rather than just a commercial asset.

Spain isn’t just following a trend—it’s helping define one. By aligning with countries like Canada, the US, France, Italy, Germany, Portugal, and the Netherlands, it’s adding fuel to a global rethink about how short-term rentals fit into modern cities.

If the bill becomes law, it won’t just mean higher prices for vacationers. It will mark a philosophical shift, where homes are reclaimed as homes, not hotels. And in the long run, that could do more to fix the housing crisis than any single construction project ever could.