With the rising demand for holiday stays and the approach of the busiest months of the year, many owners of tourist accommodations are faced with a common question: Is it mandatory to apply VAT to short-term rentals? To clear this up, we analyze the legal framework in 2025, the situations that require charging VAT, applicable rates, and the tax obligations you must comply with to avoid mistakes and possible penalties.
According to the VAT Law (LIVA), the rental of a dwelling is exempt from this tax unless additional services are provided that make the activity similar to that of a hotel. The length of stay—whether a night or several weeks—is not the determining factor; it’s the services offered that matter.
Tourist rentals are subject to VAT if complementary services are offered, such as:
Daily cleaning during the stay.
Periodic change of sheets and towels.
24-hour customer service or reception.
Breakfast or food service.
Luggage storage, laundry, newspapers, or minibar.
When one or more of these services are systematically provided, the owner is considered to be acting as a business, and the operation is subject to a reduced VAT rate of 10%.
If the property is simply handed over fully equipped, a rental contract is signed, keys are handed over, and no extra services are provided during the stay, the rental is VAT-exempt under Article 20 of the LIVA. In this case, income must be declared as real estate capital gains in the personal income tax (IRPF), but VAT obligations do not apply.
Some services are subject to the general VAT rate of 21%, even if offered alongside the accommodation:
Parking.
Access to gym or spa.
Tours, sports activities, or guided visits.
Vehicle, bike, or scooter rentals.
Sale of products or merchandise.
These services must be itemized on the invoice, distinguishing the lodging part (10%) from additional services (21%).
Often, a property is used for both taxable and exempt rentals. In these cases, VAT proration is applied to determine how much of the VAT paid on expenses can be deducted.
If during the year you earned €30,000 from VAT-taxed rentals and €10,000 from exempt ones, the prorated deduction is:
30,000 / (30,000 + 10,000) = 75%
This means you can deduct 75% of the VAT paid on expenses related to the rental activity (e.g., cleaning, utilities, software, maintenance).
If you manage your property as a VAT-liable business, you must:
Register with the Tax Agency via form 036 or 037.
Issue invoices for each stay (simplified format allowed if under €400).
File form 303 quarterly for VAT self-assessment.
Submit the annual summary (form 390).
Maintain invoice books (issued and received).
Keep documentation for at least 4 years.
Incorrect VAT application—whether by omission or applying the wrong rate—may lead to tax audits, corrections, and penalties up to 50% of the unpaid VAT, plus interest. It’s crucial to issue invoices correctly and never lump services with different VAT rates together.
Platform & host obligations: Since January 2024, platforms like Airbnb, Booking, or Vrbo must submit form 238 to the Spanish Tax Agency. This report includes:
Host and property identification.
Number of bookings and nights stayed.
Gross income and platform fees.
Guest information, when legally required.
The tax authority cross-checks this data with your VAT or income tax filings, so consistency is essential. Any mismatch can trigger a request for clarification.
Download and review platform-issued annual reports.
Reconcile your bank statements with declared income.
Ensure platform commissions include deductible VAT.
Separate accounts if managing multiple properties.
Maintain up-to-date accounting to prevent mistakes.
EU directive and 2028 changes
The EU has approved the "VAT in the Digital Age" package, effective July 1, 2028. Under this new law, all rentals under 30 nights will be treated as hotel services, making VAT application mandatory, even if no extra services are provided.
This aims to harmonize vacation rental taxation across EU states and reduce competition imbalances. The likely VAT rate will be 10%, though this is still pending confirmation.
Now is the time to prepare your fiscal and operational setup to avoid future complications.
Stay ahead for peace of mind. Tourist rentals can be a valuable source of income—but they also carry tax responsibilities. Understanding when to apply VAT, which rate to use, how to invoice properly, and which forms to submit is key to operating a legal and profitable business.
The sooner you adapt, the easier it will be to run your rental activity smoothly and without surprises.