10 per cent VAT on holiday lets: what the decree says and what is still not settled

If you let out an apartment on the Costa Blanca by the week or the weekend, that income has been exempt from VAT. From 1 December 2026 it will not be: stays of up to thirty nights will carry 10 per cent. The decree went into the state gazette on 7 October and has been in force since 8 October. There is a large caveat attached, and the caveat matters more than the percentage.

What the decree actually says

The text is Real Decreto-ley 29/2026 of 6 October, published in the Boletin Oficial del Estado of 7 October 2026 and in force since 8 October. Its full title is about protecting the social function of housing and expanding the supply of affordable homes. The VAT change is one part of it.

What it says about VAT, as briefly as it can be put:

Rate: the reduced rate of 10 per cent.
Applies to: the letting of furnished apartments or houses.
Threshold: where the stay for the same tenant does not exceed thirty nights.
Exception: it does not apply where the property is the landlord’s own main home.
Start date: the decree states that both changes take effect from 1 December 2026.

One group will notice nothing, because it was already paying. If you let with hotel-type services, meaning cleaning during the stay, breakfast, laundry and the like, you were never covered by the exemption. That situation is unchanged.

So what is new is plain holiday letting: you hand over the keys, the place is furnished, and that is the extent of it. That was exempt. From 1 December it is not.

And now the part that matters: this is not settled

This needs saying precisely, because almost everything written about it so far is stated too confidently.

A decreto-ley takes effect immediately, but it is not a finished law. Article 86 of the Spanish constitution gives Congress thirty days from promulgation to ratify or reject it. If that does not happen, it lapses.

Which is exactly what happened eleven days ago. A near-identical package, decrees 26/2026 and 27/2026 of 29 September, did not survive: on 2 October Congress declined to ratify them. The repeal of 27/2026 is in the state gazette. The cabinet then approved the package again, with technical adjustments, and that is the version now on the table.

Except the situation has changed since, and not in the convenient direction. The Cortes have been dissolved. The dissolution decree appeared in the gazette on 6 October; a general election is set for Sunday 29 November 2026, the campaign runs from 13 to 27 November, and the new parliament does not convene until 23 December.

A dissolved Congress cannot vote. What does exist is the Diputacion Permanente, the standing committee that handles business between parliaments and that can ratify a decree. That is where this is heading.

The arithmetic is tight. Sources put the committee at 68 or 69 members and do not agree on which. What they do agree on is the split: the bloc of PSOE, Sumar, ERC, EH Bildu, PNV and Podemos reaches 35, against 34 for PP, Vox and Junts. One seat.

On top of that, lawyers openly disagree about whether this is allowed: re-issuing a decree that was just voted down and having a standing committee ratify it. Some call it an evasion of the law, others point to the exceptional circumstances. The PP has said it will use every instrument available to stop it.

What this means for you: plan for 1 December, but do not sign anything you cannot unwind. Until the Diputacion Permanente has voted, this is not a fixed fact.

Who it hits and who it does not

On this coast two questions decide it: how long you let for, and to whom.

You are caught if you let a furnished apartment or house and a guest stays thirty nights or fewer. That is the entire summer letting business in Torrevieja, the Orihuela Costa, Guardamar, Benidorm, Javea, Moraira and Denia. Weekends, weeks, fortnights: all of it.

You are not caught in three cases. If the property is your own main home. If the same tenant stays longer than thirty nights, which covers the classic alquiler de temporada and long lets. And if you already provided hotel services, because you were already paying.

Watch that thirty-night rule, because it is tied to the same tenant. Two consecutive three-week bookings are two short lets, not one six-week let.

And one thing that is easily missed: this is separate from your rental licence. Registration with the Generalitat Valenciana and the number you have to display do not change because of this. If you are still working that out, we have a guide to getting a tourist rental licence in Spain.

What 10 per cent actually does to your price

VAT is not a cost like the IBI or your insurance. It is an amount you collect from your guest and hand on. So the question is not what it costs you but who pays it.

Run it on a week at 700 euros.

Pass it on: the guest pays 770, you keep the same 700. Your price sits 10 per cent higher in the search results, alongside hotels that have had that VAT in their rate for years.
Absorb it: the guest pays 700, of which 63.64 is VAT. You keep 636.36. That is just over 9 per cent less revenue.
Split it: somewhere in between, which is probably what most people will end up doing.

There is a side to this that most coverage leaves out, and it is worth real money: anyone charging VAT can, under the Spanish system, also deduct the VAT on their own costs. Cleaning, maintenance, the booking platform’s commission, furniture, a new air conditioning unit: those are invoices with VAT on them. If you outsource a lot, the gap between the VAT you collect and the VAT you pay is narrower than the headline 10 per cent suggests.

The trade-off is paperwork. Charging VAT in Spain means registering with the tax census, filing quarterly returns and submitting an annual summary. That is standard machinery that every gestor handles, but it is work you did not have before. And living outside Spain changes nothing: the VAT belongs where the property is, not where you are.

This article is not tax advice. How it lands depends on your situation, your turnover and whether you work through a platform. That is a conversation with your gestor, and it is worth booking now.

The other measure: the IBI could go up

The same package contains a second thing that touches second-home owners, and it runs through the town hall rather than through Madrid.

Municipalities designated as a zona de mercado residencial tensionado, a stressed housing market, get the option of applying a surcharge to the IBI. According to the summary of the measures, for homes in tourist use that can reach 150 per cent in certain cases. For empty homes, figures of 50, 100 and 150 per cent are mentioned, depending on how many properties an owner holds.

Two things to hold on to. First, these figures come from the explanatory summary and not from the legal text we were able to read, so treat them as an order of magnitude. Second, and more practically: it is an option, not an obligation. Your municipality has to choose it, and it has to be designated as a stressed zone first. On this coast, that is currently far from universal.

What you can do is watch the municipal ordinance, which is where it will surface first. And while you are doing sums: what life on the Costa Blanca costs sets out the fixed charges, and our guide to cutting your electricity bill covers the item that is often bigger than the IBI for landlords.

The other half of the package: 50,000 euros interest free

It is not an accident that the VAT change sits in a housing package rather than a tax bill. The government’s reasoning is that homes let permanently to tourists leave the housing stock. The VAT is meant as a brake; the rest of the package is meant to expand supply.

The piece getting the most attention is called Tu Casa, and if you have buying plans of your own this is the part to follow.

Size: a credit line of 10 billion euros, run by the ICO, the Instituto de Credito Oficial.
Form: an interest-free loan with a state guarantee.
Amount: up to 20 per cent of the value of the home, capped at 50,000 euros.
Repayment: within ten years.
For whom: first-time buyers who are creditworthy but cannot save the upfront costs. No age limit; the government calls it an intergenerational measure.

The exact conditions, meaning income ceilings, maximum property price and how you apply, are not in there yet. They come by regulation and through the ICO. Anyone with serious plans is better off first working through the steps of a Spanish purchase and then seeing whether this fits.

There is plenty more in the package: protection from eviction for vulnerable tenants to the end of 2030, a brake on purchases by funds below 70 per cent of appraisal value, an extension of running tenancies, a 2 per cent cap on rent rises to the end of 2027 and a tax deduction for lower-income tenants.

The second decree, 28/2026, deals with the stability of main-home tenancies. It only comes into force on 15 November, and only if it has been ratified before that date. The arithmetic there is worse still, because the PNV does not support that half.

What to do now

No panic required, but four things that cannot hurt.

1. Look at your bookings from 1 December. Those are first in line. What do your terms say about taxes introduced after a booking is made? If they say nothing, you now know why that would have been useful.

2. Call your gestor before the rush. If this goes through, half of Torrevieja will be registering for VAT in November. You do not want to be the last to ring.

3. List your costs. How much of your spending carries VAT you will be able to deduct? That decides whether 10 per cent is a real bite or a scratch.

4. Put 29 November in the diary, but watch earlier. The vote in the Diputacion Permanente comes before the election, because the thirty-day clock started in early October. That is the moment this is actually decided.

And the honest summary: there is a real chance this goes through, because the decree is in force and the cabinet counted the bloc before re-issuing it. There is also a real chance it does not, because the margin is one seat and the same measure has already failed once. Anyone telling you otherwise does not know either.

Frequently asked questions

When does the VAT start? 1 December 2026, if the decree is ratified.

How much is it? 10 per cent, the reduced rate.

On which lets? Furnished apartments and houses where the same tenant stays no longer than thirty nights.

Does it apply to my own home? Not if it is your vivienda habitual, your main residence. That is expressly excluded.

What about lets longer than thirty nights? Those are outside it.

I already provide cleaning and breakfast. Does anything change? No. Letting with hotel-type services was never covered by the exemption.

Do I have to pass the VAT on to guests? That is your call. You owe it either way.

Can I reclaim VAT? Anyone charging VAT may, under the Spanish system, deduct VAT on business costs. How that works out for you is a question for your gestor.

Is this final? No. The decree is in force but must be ratified within thirty days. That happens in the Diputacion Permanente, because the Cortes have been dissolved.

What if it is not ratified? The decree lapses and the exemption stays as it was. That is what happened to the previous package on 2 October.

Does my rental licence change? No. That is a separate scheme run by the Generalitat Valenciana.

Will the IBI go up? Only if your municipality is designated a stressed housing market and chooses to apply it. It is an option, not an automatic increase.

About the authorLeonie

Leonie lives on the Costa Blanca. She writes about daily life on the coast: the markets, the walks and everything you only discover once you actually live here.