Possible VAT reform on short-term tourist housing rentals
The rental of tourist apartments, an increasingly common practice in many Spanish cities, could face a significant change in the field of indirect taxation.
The Bill submitted by the Socialist Parliamentary Group on 22 May proposes, among other housing rental-related measures, a significant amendment to Law 37/1992 on Value Added Tax, affecting the tax treatment of certain leases. Specifically, it contemplates amendments to Article 20.One.23º e´) and Article 91.One.2.2º of said Law.
Currently, the rental of furnished apartments or dwellings, even short-term ones (i.e. for tourist use), is exempt from VAT unless complementary services typical of the hotel industry are provided (such as periodic cleaning, linen change, reception, etc.). In such cases, the reduced VAT rate of 10% applies.
The Bill introduces a modification of Article 20.One.23º e´) of the VAT Law to limit this exemption. From the entry into force of the new regulation, short-term leases (less than 30 nights) in municipalities with more than 10,000 inhabitants, according to the latest Annual Population Census, would be subject to VAT at the general rate of 21%, even if complementary hotel-type services are not provided.
Additionally, the simultaneous amendment of Article 91.One.2.2º of the same Law excludes the application of the reduced VAT rate (10%) for furnished apartment or dwelling leases where complementary services typical of the hotel industry are provided.
Thus, the proposed reform ultimately implies that tourist rentals would be subject to the 21% VAT rate, whether or not hotel-type services are provided, as long as it is a short-term lease (under 30 days) in a municipality with more than 10,000 inhabitants.
If the proposal moves forward, it would mark a turning point in the taxation of tourist rentals in Spain, with direct implications for both property owners and intermediary platforms.
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