21% VAT on holiday lets: what it means — and what it doesn’t

Renting & Tax

21% VAT on holiday lets: what it means — and what it doesn’t.

Before changing strategy, know your starting point: most owners today don’t pay 10% — they pay nothing.

Renting & Tax · 13 July 2026

In June, the Spanish government announced that tourist flats will be taxed at 21% VAT. The news travelled fast among Costa Blanca owners — but it pays to separate the headline from the reality. Three things almost nobody mentions: the decree does not exist yet, most owners currently pay no VAT at all, and long-term and seasonal rentals fall outside the mechanism that is known.

What has been announced (and what hasn’t)

On 29 June, after the cabinet meeting, the government announced a July housing package in two blocks: regulation of seasonal and room rentals with stronger tenant guarantees, and — in the tax block — raising VAT on tourist flats to the general rate of 21%. As of today there is no approved text, no publication in the BOE and no start date: it is a political announcement, not a law.

The real starting point: most owners pay no VAT today

It is often said that VAT “goes from 10 to 21%”, but for most owners that is not the real starting point. The current rule is clear: residential letting — including tourist letting — is exempt from VAT as long as the owner provides no hotel-style services (permanent reception, cleaning and linen change during the stay). Only those who do provide such services pay 10% today. For the great majority of private owners, the announced jump would not be from 10 to 21 points but from 0 to 21 — invoices, quarterly VAT returns and record books included.

How it would work, as far as is known

The most likely mechanism is already on paper — not in the decree, but in a bill the governing party filed in 2025: the exemption would no longer apply to stays of up to 30 nights with the same tenant in municipalities of 10,000 or more inhabitants. Those stays would move to 21%. Anything longer than 30 nights — a winter stay, a seasonal contract, a long-term rental — would remain exempt, as it is now.

Who would pay 21% — and who wouldn’t

What this means for a Costa Blanca owner

First: calm. The decree still has to survive Congress, and the recent precedent doesn’t help the government — the previous housing decree was voted down in April, 177 to 166. Then: perspective. Even if this decree falls, Europe has already set the direction. A 2025 directive allows short-term rentals to be taxed like the hotel sector, and between 2028 and 2030 the platforms will start collecting VAT directly. The real question isn’t whether short stays will eventually be taxed, but when.

And that’s the sober takeaway for this region: the model that doesn’t depend on short stays — year-round long-term rental, or winter and seasonal lets of several months — sits outside the known mechanism and outside the European direction. The income is steadier, the management more predictable, and now the tax horizon is calmer too.

What Pulse Property does for you

We focus on exactly that part of the market: long-term and winter/seasonal rentals on the Costa Blanca and Mar Menor — with the right contract, a properly documented temporary cause where it applies, the deposit handled correctly and tenants screened up front. For your personal taxes (IRPF, IRNR or, should it come to that, VAT), your gestoría or tax adviser remains the right person; we make sure the rental itself is done properly and documented properly.