Spain will increase IVA sales tax on tourist flats up to 21% if central government gets its way

PSOE have support from Sumar but the final position of the other parliamentary partners, whose votes are needed to push through this new tax deal, remains unclear

SUR

Malaga

Tuesday, 12 November 2024, 18:11

The PSOE and Sumar political parties in Spain's national government have agreed on a new tax package for 2025 with a series of important measures that modify existing taxes or directly create new taxes. One of the most striking, in the midst of the debate on the housing crisis in Spain's larger cities, is the increase in the IVA sales tax charged on tourist flats. In the tax agreement reached between both parties, IVA will be increased to 21% for tourist flats in order to cut their profitability and transform them into permanent rental housing, "alleviating the lack of permanent housing in areas under pressure."

Currently, as explained on Spain's AEAT national tax agency's website, those who rent out tourist accommodation are considered to be entrepreneurs for IVA tax purposes. However, not all of them pay IVA. "Those tourist accommodation rentals in which the lessor does not provide services typical of the hotel industry are exempt from IVA." Such services are, for example, providing a reception facility, or a permanent and continuous customer service in a dedicated area, or the changing of bed and bath linen and cleaning on a regular basis between check-in and check-out days. In the case of providing these services so typical of the hotel industry, the rental of a tourist flat is currently only taxed at the reduced IVA rate of 10% even though it is classed as a hotel establishment.

These new measures include the creation of a new tax on luxury goods, and the end of the current tax regime for listed real estate investment trust companies (known as SOCIMIs). These central governing parties also advocate "eliminating the exemption for private health insurance premiums, which has a clear regressive bias, mainly benefiting high-income individuals and families" and, at the request of Sumar, they will "establish a new tax on luxury goods (private jets and yachts, luxury cars, etc.) to improve equity in the distribution of income and wealth."

In addition, PSOE and Sumar insist on advocating "maintaining the tax on banks so that these entities, which only pay less than 3% of their profits in taxes and which are making record profits, contribute fairly to sustaining society."

The agreement between the two parties does not imply that these new tax measures will become a definite reality in 2025. The final position of the other parliamentary parties, necessary to push through this new tax agreement, is not yet clear.

Top 50

Reporta un error en esta noticia