Spain explores imposing a 21% tax on temporary lodgings as a means to address housing shortage predicament.
Spain Contemplates 21% Tax on Short-term Rentals to Control Tourism and Alleviate Housing Crisis
In an attempt to regulate tourism and preserve local communities, Spain is considering imposing a value-added tax (VAT) of 21% on short-term rentals, almost double the current rate levied on hotels. This proposed tax will affect over a third of Spain's annual visitors, approximately 94 million in 2021, as most prefer short-term rentals via platforms such as Airbnb and Booking.
The proposed tax would apply to units rented for less than 30 days. Its implementation may result in a shift away from holiday rentals or generate substantial new revenues for the state to reinvest in mitigating the ongoing housing crisis by reducing speculative investment and redirecting housing supply towards long-term rentals for residents.
Currently, tourists staying in hotels across Spain pay a 10% tax on rooms. In the Canary Islands, both hotels and short-term rentals are subject to a lower rate of 7%. If the 21% tax proposal is enacted, it could make short-term rentals less attractive to owners and potentially guide them towards offering long-term residential leases.
Other measures introduced in response to escalating discontent and protests against overtourism in Spain include capping visitor numbers in tourist hotspots, creating designated tourist areas near iconic monuments, suspending agreements with influencers, requiring tourists to present booking confirmation upon entry or check-in, and imposing heavier fines for misconduct such as inappropriate dress and public urination.
The housing and tourism reform bill, part of the Socialist-led government’s broader efforts, faces internal challenges due to deep divisions within the government. The proposed tax is designed to address the persistent housing shortage and skyrocketing rental prices, as well as water scarcity and ecological degradation concerns expressed by residents.
According to a Bank of Spain report, there is a shortage of 450,000 homes, a problem exacerbated by short-term rentals. In the Canary and Balearic Islands, half of the housing is either used for tourism or owned by non-residents.
The bill's defenders assert that homes are intended for living, not for tourist accommodations. Additional measures proposed include a tax of up to 100% on property purchases by non-EU residents unless it is their primary residence, as well as a tax hike on owners of empty houses, including secondary residences.
In explanation of this policy, Housing Minister Isabel Rodriguez stated, "Homes are for living in... The measures seek to guarantee the right to rental housing for families." However, this measure has drawn criticism from within the sector, with some calling it discriminatory.
The government's recent removal of 65,000 unregulated Airbnb listings signals a commitment to enforcing regulations and "returning balance" to communities affected by tourism. The strictest measures regarding tourist accommodation have been implemented in Barcelona, which will cap new licenses, while Málaga and Madrid will only limit them. Barcelona plans to ban new licenses altogether.
This policy aims to find a delicate balance between the economic benefits of tourism, a cornerstone of Spain's national economy, and the legitimate concerns of residents.
- The proposed tax on short-term rentals in Spain may promote a shift from holiday accommodations towards long-term rentals for residents.
- The housing and tourism reform bill aims to address the housing shortage and skyrocketing rental prices, as well as concerns over water scarcity and ecological degradation.
- The government is considering imposing a 21% value-added tax (VAT) on short-term rentals, compared to the current 10% tax on hotel rooms.
- If enacted, the 21% tax on short-term rentals could make these options less attractive to owners, potentially leading them to offer long-term residential leases instead.
- The bill's supporters argue that homes are for living, not for tourist accommodations, and propose taxes on property purchases by non-EU residents unless it is their primary residence.
- Tour operators and luxury hoteliers might benefit from the potential decline in short-term rental availability, offering eco-friendly, unique accommodations to tourists seeking a local island lifestyle.
- Local communities may find some relief from the impacts of tourism as Spain's government works to enforce regulations and "return balance" through strict measures regarding tourist accommodation.
