By: Josep Navarro

Tourist rentals: a new 10% VAT rate for stays of up to 30 nights from December 2026

The Government has approved a reform that could significantly change the taxation of thousands of tourist apartments and homes let for short stays.

Royal Decree-Law 29/2026 of 6 October, published in the Official State Gazette (BOE) on 7 October, amends the VAT Law.

In general, furnished apartment or dwelling rentals for stays of up to 30 nights will be subject to 10% VAT, even if the owner provides no hotel-type services. The measure is scheduled to apply from 1 December 2026.

There is an essential caveat: as at the date of this article, the decree-law is awaiting parliamentary ratification, so its continued effect cannot yet be treated as definitive.

1. A tourist apartment rental has not always been subject to VAT

Article 20(One)(23) of Law 37/1992 exempts certain leases of buildings or parts of buildings used exclusively as dwellings. This exemption has also applied to many tourist rentals where the landlord merely made the property available to the guest.

The decisive issue was not simply the length of the stay. It was whether the landlord provided additional services typical of the hotel industry. For example, a five-night rental involving key handover and cleaning only between bookings could be exempt. By contrast, genuine hotel services provided during the stay generally made the supply taxable, normally at the reduced 10% rate.

This distinction has been central to the taxation of tourist rentals, and the legislature now intends to change it.

2. The new test: stays of up to 30 nights

Article 7 of Royal Decree-Law 29/2026 amends Article 20(One)(23)(e) of the VAT Law. It adds a new exception to the exemption for furnished apartment or dwelling rentals where the same tenant’s stay does not exceed 30 nights.

As a result, a seven-, ten- or twenty-night rental may be subject to 10% VAT even if the owner simply hands over the keys and allows the guest to use the property. The decree-law also amends Article 91(One)(2)(2) of the VAT Law to apply the reduced rate to these supplies.

3. Not every tourist rental will be subject to 10% VAT

The reform should not be read too broadly. It does not mean that every residential rental will be taxed at 10%.

Type of rental	Expected treatment
Furnished apartment, 7-night stay, no hotel services	10% VAT
Furnished apartment, 20-night stay, no hotel services	10% VAT
Furnished apartment, 30-night stay, no hotel services	10% VAT
Furnished apartment, 45-night stay, no hotel services, used as a dwelling	Exemption may continue to apply
Accommodation with hotel-type services	10% VAT, regardless of duration
Accommodation in the landlord’s habitual residence, without hotel-type services	Exemption under the statutory exception

These examples assume that the other requirements for each transaction are met. Duration alone will not resolve every case, particularly where the property is not actually used as a residence or special circumstances apply.

4. An important exception: the landlord’s habitual residence

The reform expressly excludes certain accommodation provided in the landlord’s habitual residence from the new exception to the exemption for stays of up to 30 nights.

Accordingly, where the landlord provides accommodation in the apartment or dwelling that is their habitual residence, and provides no hotel-type services, the exemption may continue to apply if the other legal requirements are met.

This requires a distinction between an owner operating a separate apartment as a tourist rental, which is expected to attract 10% VAT for stays of up to 30 nights, and an owner providing accommodation in their own habitual residence, who may fall within the statutory exception. The relevant facts should be properly evidenced.

5. What about Airbnb, Booking and property managers?

The reform also affects tourist accommodation arranged through intermediaries. Many owners use digital platforms or management companies to advertise properties, administer bookings, set prices, collect payment and remit the proceeds.

The legal relationships must be distinguished. First, the owner may rent directly to the guest through an intermediary platform. In that case, it is necessary to determine whether the owner is the supplier of the accommodation and must apply the relevant VAT treatment.

Second, the owner may lease the property to a company that operates it on its own account. There may then be two separate supplies: the lease or transfer of use from the owner to the operating company, and the accommodation supplied by that company to the final guest. Each must be classified separately.

The 10% VAT rate on the guest’s accommodation does not automatically determine the VAT treatment of the owner’s lease to the manager. This distinction can be especially important where the owner is an individual who is not resident in Spain. The contracts should be reviewed, not just the invoices issued to tourists.

6. The economic impact: higher prices or lower returns?

Suppose a tourist apartment is currently rented for €1,000 per stay. If the rental is VAT-exempt, the owner receives gross income of €1,000 before expenses and other applicable taxes. Under the new regime, two scenarios are possible.

Scenario A: the owner keeps the final price unchanged

The guest continues to pay €1,000, inclusive of VAT:

Item	Amount
Taxable amount	€909.09
10% VAT	€90.91
Total paid by guest	€1,000.00

The owner’s income before expenses and direct taxes falls to €909.09, a difference of €90.91 for every €1,000 collected.

Scenario B: the owner passes on all the VAT

Item	Amount
Taxable amount	€1,000.00
10% VAT	€100.00
Total paid by guest	€1,100.00

The owner retains €1,000 before expenses, but the guest pays 10% more. In practice, the VAT may be passed on in the price, reduce the operator’s margin or be shared economically between them. The outcome will depend on competition, demand and pricing policy.

7. The right to deduct input VAT

The reform may not simply increase tax payable. Where a residential rental is VAT-exempt, the landlord generally cannot deduct input VAT on goods and services used exclusively for that exempt activity, such as renovations, furniture, cleaning, utilities, intermediary commissions and professional services.

If the activity becomes taxable and not exempt, the landlord may acquire a right to deduct input VAT attributable to taxable transactions, provided the legal requirements are met. The financial effect therefore depends on both output VAT and deductible input VAT, particularly for recently acquired, renovated or furnished properties.

8. Can VAT on earlier renovation costs be recovered?

Suppose an owner completely renovated a tourist apartment in 2025, while the activity was exempt and some input VAT was not deducted. If the activity becomes taxable and not exempt from December 2026, can part of that VAT be recovered?

The answer requires distinguishing current expenses from capital goods and applying the time limits and adjustment rules for deductions. Articles 107 to 110 of the VAT Law govern adjustments to deductions for capital goods. In some cases, a change in the use of an asset can have consequences during the adjustment period.

There is, however, no automatic right to recover all VAT incurred in earlier tax periods. The nature of each expense, the acquisition or renovation, when the property was used, deductions already claimed and the relevant adjustment rules must be examined.

9. Effects on personal and corporation tax

The VAT reform may also indirectly affect the calculation of income subject to direct taxation. Output VAT is generally not the landlord’s own income for calculating taxable profit, and deductible input VAT is normally not a tax-deductible expense.

When an activity changes from exempt to taxable and not exempt, the tax treatment of income, expenses and investments may therefore change. For individuals, it is also necessary to determine whether the income is from real estate capital or an economic activity under the Personal Income Tax rules. Charging VAT does not automatically turn a rental into an economic activity for personal income tax purposes. The taxes have separate classification rules.

10. Contracts and bookings made before 1 December

The effective date may raise practical issues. For example, a property might be booked in October for a December stay, or a booking might be partly paid in November for accommodation provided in January 2027.

In these cases, the VAT chargeability rules in Article 75 of the VAT Law must be examined, including the treatment of advance payments. The invoice date alone is not decisive. The booking date, advance payment and actual provision of accommodation may all be relevant to determining the applicable regime.

11. A reform that was rejected once before

The Government initially approved similar measures through Royal Decree-Law 26/2026 of 29 September, but Congress rejected that text on 2 October. The Council of Ministers subsequently approved Royal Decree-Law 29/2026 of 6 October, restoring the VAT change for short-term accommodation.

The new decree-law was published on 7 October and entered into force on 8 October, although the VAT amendments discussed here are scheduled to take effect on 1 December. As at the date of the original article, the reform had been approved and published but still required parliamentary ratification.

This is significant. If Congress rejects the decree-law, its provisions will cease to have effect. Owners and advisers should therefore monitor its parliamentary progress before making irreversible decisions.

12. What should owners and managers do now?

Although parliamentary uncertainty remains, operators with many bookings or substantial revenue can start assessing the potential effects. They should review:

Operating contracts: identify who legally supplies the accommodation and who must charge VAT.
Length of stays: distinguish stays of up to 30 nights from longer rentals.
Pricing policy: decide how VAT might be passed on to guests.
Invoices and management systems: prepare for the treatment of taxable, non-exempt supplies.
Input VAT: identify expenses, investments and possible capital-goods adjustments.
Advance bookings: examine payment and chargeability dates.
Registration and periodic filing obligations: check whether the new regime requires changes to the taxpayer’s registration or returns.

Any final adjustments should take account of the parliamentary decision and any administrative guidance that may be issued.

Conclusion: a tourist rental may cease to be exempt even without hotel services

Royal Decree-Law 29/2026 proposes one of the most significant recent changes to the taxation of tourist accommodation. Until now, additional hotel-type services were central to deciding whether certain tourist rentals were subject to 10% VAT or exempt.

The new rule adds another test: the length of the stay. In general, furnished apartment or dwelling rentals for stays of up to 30 nights will be subject to 10% VAT, even without hotel-type services, subject to the statutory exceptions.

This may affect prices, profitability, input VAT deductions and the tax administration of many properties. It also raises legal questions about contracts with operating companies, advance bookings and investments made before the change.

The key questions are not only how much VAT must be charged, but who must charge it, when it becomes chargeable and what input VAT may be deducted.

The measure is scheduled to apply from 1 December 2026, but its continuation still depends on parliamentary ratification of Royal Decree-Law 29/2026. It is a significant reform to monitor closely, but its regulatory stability cannot yet be taken for granted.