VAT on holiday rentals: struck down on Friday, back on Wednesday

On 30 September a decree was published requiring VAT to be charged on holiday rentals. On Friday 2 October, Congress struck it down. On Monday 5 October, Parliament (the Cortes) was dissolved and a general election was called for 29 November. And on Wednesday 7 October, Spain's Official State Gazette (BOE) published a new decree, Royal Decree-law 29/2026, with the same VAT inside.

If you thought the matter was closed, I'm sorry to say it isn't.

\## The back door: the Standing Committee

With Parliament dissolved, the full Congress no longer meets. Its functions are taken over by the Standing Committee (Diputación Permanente), a smaller body of 69 members of parliament from all groups, in proportion to their weight. Among other things, it is the body that ratifies or repeals decree-laws while there is no Parliament.

And here the numbers change. What the full Congress rejected by a handful of votes may get through in the Standing Committee, where a majority is 35 votes. The Basque Nationalist Party (PNV), which voted against on 2 October, has announced that this time it will support the decree. The vote is scheduled for 16 October.

\## What the measure says

If it is ratified, from 1 December 2026 the rental of furnished homes for stays of up to 30 nights will be subject to 10% VAT, unless it is the owner's habitual residence. It will make no difference whether or not hotel-type services are offered, which until now is what made the difference.

It applies to properties located on the Spanish mainland and in the Balearic Islands. In the Canary Islands the tax is IGIC, which follows its own path, as I explained on this blog.

\## What it will mean for small landlords

I have clients with a holiday flat who have never filed quarterly returns, because their rental did not carry VAT. If the decree is ratified, they will have to:

\- Register with the Spanish Tax Agency as businesses for VAT purposes before 1 December.

\- Issue an invoice for every stay.

\- File the quarterly VAT return (Form 303) and the annual summary (Form 390).

\- Decide whether to raise their prices by 10% or absorb it themselves, including for bookings already confirmed for those dates.

In return, they will be able to deduct the VAT on some of the property's expenses. It's better than nothing.

\## What should you do now?

For now, wait until 16 October. If the Standing Committee ratifies the decree, there will be about six weeks to get everything organised before 1 December: registering with the Tax Agency, setting up invoicing and adjusting prices. If it does not, we will be back to square one… until the next attempt.

\## Come what may

This is where holiday rental owners stand today: on Friday they were spared the VAT, on Wednesday it was back on their shoulders, and on the 16th they will find out whether it is for real. If it comes, let it come; better to be caught with the numbers at hand and the paperwork in order.

For my part, I will keep a close eye on the vote and let you know here. Best regards, and until next time.