Spain plans tax increase on holiday rentals

The proposed changes align with a new European Union directive on value-added tax (VAT) for digital platforms. Currently, Spanish hotels are subject to a reduced 10% VAT rate, which is included in their charges, but platforms like Airbnb are taxed differently. Sánchez also pledged stricter oversight of short-term rental platforms to address fraud and misleading listings, though he did not provide detailed plans. Authorities have already begun investigating Airbnb for failing to remove inaccurate rental advertisements.

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Housing affordability has become a pressing issue in Spain, as the country struggles to balance its reliance on tourism with the impact of rising rents due to gentrification and the shift of residential properties to the short-term rental market. To address these challenges, the government plans to offer tax incentives to landlords in high-rent areas who maintain affordable pricing in line with official indexes.

Additionally, Sánchez unveiled a strategy to expand social housing. The government will allocate 2 million square metres of residential land to a newly established public housing agency to increase the availability of affordable homes. However, Sánchez’s minority government faces significant hurdles in advancing these proposals due to opposition in a fragmented parliament. His policies have sparked criticism from both conservatives, who view the measures as overly interventionist, and left-wing allies, who argue that the actions do not go far enough to regulate exploitative landlords.

The issue of housing has sparked widespread public discontent, with protests erupting in several regions over unaffordable rents. Spain, historically a nation of homeowners, has seen an increasing shift towards renting, placing financial strain on households. The Bank of Spain has also urged government intervention, warning that the high percentage of income spent on rent compared to other EU countries could lead to significant economic and social repercussions. Sánchez reaffirmed his commitment to prioritising residents’ needs, stating, "The government’s role is to ensure housing serves as a home for people, not as an unchecked source of speculative profit."