VAT on holiday rentals in Spain: When does IVA apply?
Many owners who let their holiday apartment on Mallorca through Airbnb or Booking assume that VAT (known in Spanish as IVA) does not apply to them – after all, it is ‘just’ a holiday apartment, not a hotel. That misconception can prove costly. Whether IVA applies to holiday lets in Spain depends not on the size of the property, but on the services you provide during your guests’ stay – and which region of Spain your property is in. This guide explains when VAT applies in the Balearic Islands, the filing deadlines and which reforms are on the horizon but are not yet in force (as of 2026).
The basic rule: When does IVA apply to holiday lets?
The deciding factor is not the booking platform, but the nature of the service you provide. Simply providing accommodation – handing over the keys, allowing the guest to stay, and changing the bed linen and cleaning the property between bookings – is treated much like a long-term let for tax purposes and is generally exempt from VAT. But as soon as you provide additional hotel-type services during a guest’s stay, the let becomes a service subject to VAT.
These ‘hotel-type ancillary services’ include:
- Reception or check-in service
- Cleaning the property during the guest’s stay (not just between guests)
- Laundry service during the stay
- Food and drink, such as breakfast service
Note: If you provide none of these additional services, the holiday let remains exempt from VAT – whether you let through Airbnb, Booking.com or directly.
| Feature | VAT-exempt | Subject to VAT (IVA) |
|---|---|---|
| Cleaning | only between bookings | also during the stay |
| Reception/check-in | no | yes |
| Laundry service | no | during the stay |
| Food and drink | no | e.g. breakfast |
| Comparable to | Long-term letting | Hotel or accommodation business |
The Balearic Islands rule in detail
On Mallorca and the other Balearic Islands, private tourist rentals require a permit (ETV licence) and become subject to IVA as soon as hotel-style ancillary services are provided. Without these additional services, the rental remains exempt from IVA despite the licensing requirement. Where IVA applies, the current rate (as of 2026) is 10 % on tourist accommodation.
| Type of rental | Permit required | Value added tax (IVA) |
|---|---|---|
| Long-term residential rental | no | exempt from IVA |
| Tourist rental without additional services | ETV licence required | exempt from IVA |
| Tourist rental with hotel-style ancillary services | ETV licence required | 10 % IVA |
| Purchase + leaseback to a hotel operator (long-term commercial use, often approx. 20 years) | governed by contract | subject to IVA |
| Hostal operation / turismo rural | separate type of licence | generally subject to IVA |
If you are unsure whether your licence is transferable or even valid, you can find details in the guide to transferring an ETV licence.
Distinction: In the Canary Islands, a separate indirect tax (IGIC) applies instead of IVA, with its own rules. It does not apply to a holiday rental on Mallorca; only IVA applies here.
| Region | Type of tax | Standard rate | Special feature |
|---|---|---|---|
| Balearic Islands | IVA | 10% where ancillary services are provided; otherwise exempt | standard hotel ancillary services rule |
| Mainland Spain | IVA | 10% where ancillary services are provided; otherwise exempt | same basic rule as in the Balearic Islands |
Distinction from commercial property rental (shops and other business premises)
Do not confuse holiday lets with the rental of commercial premises: different rates and reporting obligations apply. For example, if you rent out a shop on Mallorca to a Spanish company, as a landlord registered as non-resident you have had to charge and remit 21% IVA yourself since 1 January 2023. Until the end of 2022, the reverse-charge mechanism made the tenant liable for the tax instead.
Important: If you rent commercial premises to a Spanish company, you must file an annual return in January in addition to quarterly VAT returns. If your rental income exceeds €3,006 a year, you must also file the aggregate tax return Modelo 347 in January/February of the following year.
Why there is (still) no small-business VAT exemption
EU Directive (EU) 2020/285 provided for microbusinesses with annual turnover below €85,000 to be exempt from VAT across the EU from 1 January 2025, similar to the German small-business scheme. Spain has still not implemented the directive and has missed the EU deadline. The European Commission has therefore formally brought a case against Spain before the Court of Justice of the European Union.
For you as a landlord, this means that, however low your rental income, if you are liable for IVA in principle (for example, because you provide ancillary services), you must continue to charge VAT and file quarterly returns using Modelo 303. Spain currently has no minimum threshold.
| Milestone | Details | Status (2026) |
|---|---|---|
| 1 January 2025 | EU-wide small-business VAT exemption for annual turnover of up to €85,000 | not implemented by Spain |
| ongoing | European Commission case against Spain before the Court of Justice of the European Union | pending |
| 2027 at the earliest | possible entry into force following political pressure | uncertain |
| realistically 2028 | entry into force if there are further delays in parliament | more likely date |
Planned reform: Will IVA rise to 21%?
In late June 2026, the Spanish government announced a Real Decreto-ley that would, among other things, raise IVA on holiday lets from 10% to 21%, alongside new tenant protections for seasonal contracts. The cabinet removed the decree from its agenda, however, because it lacked sufficient political support (Podemos opposed the underlying land law reform, while Junts called for changes to the incentives for landlords). It was expected to return to the agenda at the first cabinet meeting in September.
Note:As of 2026, no text relating to this increase has been published in the BOE. Even if adopted, such a Decreto-ley would have to be approved by Congress within 30 days – a hurdle that an earlier attempt (RD-ley 8/2026) failed to clear in April.
Separately, another reform proposal has a later timetable: under current plans, Spain would charge IVA on all short-term tourist lets of up to 30 nights from 1 July 2028, regardless of whether additional services are provided. This is not yet law either, but an announced proposal.
| Date | Planned change | Status |
|---|---|---|
| announced for July 2026 | IVA increase on holiday lets from 10% to 21% | not published in the BOE; postponed |
| 1 July 2028 (planned) | IVA on all short-term lets of up to 30 nights | not yet law |
| 2027/2028 (planned) | small-business exemption up to €85,000 | dependent on the EU deadline |
Modelo 303: registration and deadlines
If you are required to charge IVA, you must register for it in Spain as a non-resident taxpayer and file Modelo 303 quarterly.
- Apply for tax registration in Spain (NIE/NIF required)
- Issue invoices showing IVA to guests or booking platforms
- File a quarterly return using Modelo 303
- Also file an annual return in January
- For rental income over €3,006 per year: file Modelo 347 in January/February of the following year
| Period | Modelo 303 filing deadline |
|---|---|
| 1st quarter (Jan–Mar) | 20 April |
| 2nd quarter (Apr–Jun) | 20 July |
| 3rd quarter (Jul–Sep) | 20 October |
| 4th quarter (Oct–Dec) + annual return | 31 January |
IVA versus income tax (IRPF/IRNR): Don’t confuse them
A common misconception: IVA and income tax on rental income are two separate taxes with different forms. IVA applies to the service itself (Modelo 303), while income tax on the income earned is reported using Modelo 210 (IRNR for non-residents). Orden HAC/623/2026 (published in the BOE on 23 June 2026) amended Modelo 210, 211 and 213: deductible expenses must now be itemised for each property, and rental income has a new payment deadline of 1 to 20 April of the following year – already applicable to income from 2026.
For details on income tax on rental income as a non-resident, see our guide to tax on rental income for non-residents.
Fines and compliance risks
Beyond the IVA question, failing to register a tourist rental, or registering it incorrectly, can lead to substantial penalties. Renting to tourists without a valid licence can result in fines of up to €5,000, from €5,001 to €50,000 or from €50,001 to €500,000, depending on the severity of the offence. The Balearic government has also set up a body known as the Mesa del Intrusismo: daily fines of €500 to €5,000 apply while an illegal listing remains active after an official order to remove it, with the case referred to the public prosecutor after two ignored orders. Owners who convert their property to affordable rental housing may receive a reduction of up to 80% on the fines.
| Offence | Penalty |
|---|---|
| Tourist rental without a licence | Fine depending on severity: up to €5,000, €5,001–€50,000 or €50,001–€500,000 |
| Illegal listing remains active after an order to remove it (Balearic Islands) | Daily penalty of €500–€5,000/day |
| Two ignored orders | Referral to the public prosecutor |
| Conversion to affordable rental housing | Reduction of up to 80% possible |
Regulation VAU/1560/2025 has also applied since 2 January 2026. It requires short-term rental landlords to report booking data to the Land Registry for information purposes. For more on the formal requirements, see our guide to subletting in Spain.
Most common mistakes
- Assuming all holiday rentals are exempt from IVA, even when cleaning is provided during the stay or breakfast is offered
- Assuming there is already an €85,000 small-business threshold, as there is in Germany
- Treating announcements about the 21% reform as though it were already law
- Confusing IVA (Modelo 303) with income tax (Modelo 210)
- Underestimating the importance of an ETV licence, despite the risk of fines of up to €500,000
Checklist for landlords
- Check whether hotel-style services are provided during guests’ stays
- Check whether any services provided during the stay trigger IVA
- If IVA applies, arrange tax registration in Spain
- Add the Modelo 303 deadlines to your calendar (20.4/20.7/20.10/31.1)
- Check the Modelo 210 income tax deadlines separately
- Check the ETV licence and reporting requirements (VAU/1560/2025)
- Keep an eye on the proposed 21% reform and the small-business exemption
For ongoing management of these obligations, it is often worth using a property manager for holiday homes.
What happens next?
The tax landscape for holiday landlords in Spain remains in flux in 2026: the case against Spain before the Court of Justice of the EU could lead to a small-business exemption in 2027 at the earliest, though 2028 is more realistic. At the same time, a politically contentious increase in IVA on holiday apartments from 10% to 21% is being discussed, as is a possible general IVA obligation for all short-term lets of up to 30 nights from July 2028. If you are letting a property now, keep an eye on both developments without applying rules that are not yet in force. For an overview of other regulatory requirements, see the guide to the Ley Vivienda Balearen.
Conclusion
Whether IVA applies to your holiday let in Spain depends on the type of service you provide, not the size of your business. On the Balearic Islands, simply letting accommodation remains exempt from IVA, while hotel-style additional services trigger IVA at 10%. Despite the EU requirement, Spain does not yet have a small-business threshold like Germany’s – and the announced increase to 21% is not yet law. By distinguishing between IVA (Modelo 303) and income tax (Modelo 210), meeting deadlines and keeping track of your licence, you can avoid the most costly mistakes.
Official sources
- Council Directive (EU) 2020/285 on the small-business exemption – implementation status in Spain and the case before the Court of Justice of the EU: steuerberatermallorca.com
- Orden HAC/623/2026 (Modelo 210/211/213, BOE of 23 June 2026) and current regulatory developments: propertyhost.es/de/actualidad
- Regulation VAU/1560/2025 on reporting requirements for short-term lets (effective from 2.1.2026): legalium.de/touristische-vermietung-spanien
- ADVANCE LEGALTAX SOLUTION SL – Holiday letting in Spain, value added tax (IVA/IGIC): steuerberaterspanien.com
- ADVANCE LEGALTAX SOLUTION SL – Tax obligations for property owners in Spain 2026: steuerberaterspanien.com
- Mallorca tourist tax and taxes for non-residents: mallorca.com
- Holiday rentals in Spain – VAT liability: willipedia.plattes.net
This guide provides a general overview of the legal position and does not replace legal or tax advice on your individual circumstances. Laws and deadlines may change; the linked official sources are authoritative.