Spanish government plans 21% IVA and 100% property tax hike to crack down on holiday lets

However, the draft decree - agreed between the governing coalition parties PSOE and Sumar - has been postponed until after the summer recess as the minority government lacks the parliamentary votes required for its approval.

Key allies have threatened to derail the measure. Catalan nationalist party Junts called the proposal "interventionist" and demanded tax relief for small landlords alongside stronger anti-squatting measures. Meanwhile, left-wing party Podemos rejected the draft over fears that planned land-law reforms included in the package would encourage property speculation.

If passed, the decree would cap holiday rentals at a maximum of 31 consecutive days and introduce tax measures designed to make short-term letting financially unviable.

Under the proposals, local councils in designated high-demand housing zones would be empowered to apply a surcharge of up to 50% on the standard Impuesto sobre Bienes Inmuebles (IBI) property tax for holiday lets. This surcharge would double to 100% for landlords holding four or more tourist properties.

The decree also strips short-term lets of their IVA (VAT) exemption and excludes them from the reduced 10% rate applied to the hospitality sector. Instead, short-term rentals lasting 30 days or fewer in municipalities with a population of 10,000 or more would attract the standard 21% IVA rate.

Digital platforms such as Airbnb and Booking.com face severe penalties if they refuse to share rental data with Spain's new central registry (Ventanilla Única Digital):

• Very serious infractions: Fines of up to €1,000,000 or 2% of global annual turnover for failing to supply mandatory data.

• Serious infractions: Fines of up to €500,000 or 1% of global annual turnover for submitting incomplete or inaccurate details.

• Minor infractions: Fines of €100,000 for late submissions.

The wide-ranging decree extends beyond holiday lets, introducing measures to protect long-term tenants and tighten regulations on seasonal room rentals:

• Proof of temporary stay: Seasonal lease contracts must state and prove the specific reason for a temporary move. Landlords bear the legal burden of proof. Without valid justification, the agreement automatically converts into a primary residence contract with full tenant protections applied retroactively.

• Property repairs: Tenants can issue a written request and a reasonable quote for necessary repairs. If the landlord fails to act or offer an alternative within 15 days, the tenant may pay for the work directly and deduct the cost from future rent payments.

• Rent freezes: The text reinstates a two-year freeze on existing lease agreements expiring before 30 June 2028.

• Insurance costs: Landlords will be banned from passing default-insurance costs onto tenants.

• Investment vehicles (Socimis) holding residential assets would also see their tax rate on undistributed profits rise from 15% to 25%, though companies allocating at least 80% of their housing stock to affordable rentals would receive a 50% tax reduction.