Tourist rental properties in the Balearics are set to contribute around €100 million yearly through a new VAT on holiday rentals, coming into effect from 1 December, according to estimates by PSIB based on last year’s overnight stay data. This measure is part of the housing decree approved by the Council of Ministers and awaits confirmation from the Congress of Deputies.
The Balearic Government manages half of the VAT collected from this tax, meaning the regional government is expected to receive around €50 million annually from revenues linked to holiday rentals. Socialist MP Marc Pons estimates this amount under a 10% VAT rate applied to tourist rentals. However, the Government currently lacks a definitive forecast on the final income from this new tax, according to sources from the Vice Presidency.
Pons supports the VAT introduction and criticises the PP for opposing taxation of these accommodations, arguing that tourists staying in holiday rentals should be taxed on equal footing with hotels and tourist apartments. The charge will affect more than 26,000 officially registered holiday homes across the islands, with around 158,769 available places, although some units are not currently operational.
Applying VAT to holiday rentals to equalise tax treatment
The deputy pointed out: "Tourists staying in hotels or tourist apartments pay VAT. Why shouldn't those within holiday rental homes?" He argues that holiday rentals should not remain VAT exempt, especially since hotels, apartments, and holiday homes already contribute via the sustainable tourism tax. Introducing VAT would harmonise the fiscal treatment of the different types of accommodation.
The Balearic Government has yet to publicly respond to this VAT introduction, which could indirectly benefit it via the estimated €50 million in revenue. Vice President Antoni Costa has not commented directly but noted that Balearics is the only autonomous community to prohibit new tourist flats and highlighted a 20% reduction in holiday homes over the past three years. According to the Govern, there are currently 5,000 fewer tourist homes than during the last PSIB-led legislature.
Tax changes and political negotiations
The Spanish government parties initially proposed a 21% VAT rate, as reflected in early drafts discussed by PSOE and Sumar. However, following discussions with various political groups in Congress, the VAT rate was lowered to 10%, a key demand from PNV, which has indicated it will approve the decree during the Permanent Deputation meeting.
The decree is already in force since last week’s publication in the Official State Gazette, although the exact date for its convalidation by Congress remains unconfirmed.