Spain launches another tax raid on British holidaymakers

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Spain's socialist government is planning a tax raid on British holiday let-owners in the country.
The ruling Spanish Socialist Workers' Party wants to charge 21pc VAT on stays of less than 30 days – more than double the rate paid by hotels.
It comes as Madrid lawmakers take aim at foreign property investors as part of efforts to tackle high housing costs.
Draft legislation put before the Spanish parliament would raise taxes on owners of short-term tourist rentals from the current rate of zero. The levy rate paid by hotels is just 10pc.
Unveiling the new bill last month, housing minister Isabel Rodriguez said: 'Homes are for living in [...] the measures seek to guarantee the right to rental housing for families.'
The proposed change is part of the same legal push to impose a 100pc purchase tax on the sale of Spanish property to non-European Union buyers and also includes higher taxes for second homes and vacant properties.
Alex Radford, partner at Spain-based law firm English Solicitor & Abogado, said: 'The VAT has got more chance of being implemented than the 100pc tax on a property bought by a non-European.'
He said that if approved, the bill would likely increase the cost of holidays and lead to fewer available holiday lets in Spain.
'We would envisage that the rental [market] is going to be slightly more expensive. If owners have to add 21pc VAT to the cost of a rental, then we would expect rentals to decrease and people will look at other countries.'
'It's still early days and we don't know what will get approved and what will not,' Mr Radford added.
Millions of Britons who visit and live in Spain face losing out because of the new laws, which will undergo scrutiny and potentially amendment before being voted on in the second half of this year.
There were more than 260,000 British expats living in Spain at the last official count in 2020, while it received 1.6 million tourists from the UK – more than any other country – during the busy April period last year, according to the Spanish statistics agency.
Robert Amsterdam, partner Amsterdam & Associates, a law firm that has campaigned against higher Spanish taxes, said: 'The Spanish government is diverting the attention of the Spanish people away from the government's behaviour and they're coming up with the British as enemy number one.'
Most estimates place the number of British people who own property in Spain between 800,000 and one million. A figure for the number of British holiday let-owners in the country was not available.
British non-residents bought 3,480 homes in Spain in the first half of 2024, making up 38pc of a total of 9,166 properties sold to non-resident non-EU buyers, according to the latest available figures from the General Council of Spanish Notaries and Spanish Property Insight.
Growing anti-tourist sentiment in Spain has already seen cities like Malaga and Madrid capping new licences for holiday lets, while Barcelona will ban them completely by 2028.
Spanish media reported in January that Barcelona's plans would cost €1.9bn (£1.6bn) and lose the city around 40,000 jobs, based on a report by consultancy PWC.
The country's minority coalition government has defended a crackdown on foreign property investors and holiday let-owners as necessary to make more housing available for Spanish people.
There is a deficit of 450,000 homes across Spain, according to a Bank of Spain report published this week. In popular tourist destinations like the Canary and Balearic Islands half the housing stock is either holiday lets for tourists or homes owned by foreigners, it said.
Javier Peñate, a legal adviser to a holiday homeowners association in the Canary Islands, told Reuters: 'The sole objective is to put an end to these activities and leave [tourism] in the hands of hoteliers.' Short-term rentals in the province already pay 7pc VAT, as do hotels.
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