Spain: the government is considering applying VAT to tourist apartments to discourage supply

29-06-24

In an effort to control the proliferation of illegal tourist apartments, the Spanish government is evaluating the implementation of fiscal measures to discourage their supply. After announcing fines of up to 100,000 euros for tourist rental platforms that publish illegal ads, the Minister of Social Rights, Consumption and Agenda 2030, Pablo Bustinduy, has raised the possibility of applying VAT to vacation homes, treating them "like any commercial activity". This measure seeks to reduce the economic attractiveness of allocating properties to tourism to the detriment of the residential rental market.

The minister argued that the VAT exemption on vacation homes encourages their tourist use, diverting them from their primary function as residences. "We must encourage the homes to be used for what they were built for: for people to live in them. In the meantime, we will continue to build more public housing and promote social renting," the minister stressed.

The Minister of Housing and Urban Agenda, Isabel Rodríguez, has supported this initiative, pointing out that in some Spanish cities up to 10% of the housing stock is earmarked for tourist housing. This situation has contributed to the increase in housing prices, making it difficult for young people to emancipate themselves and forcing many families to leave the cities due to the lack of access to affordable rents.

In addition to the tax measures, the Spanish government is considering amending the Horizontal Property Law to allow the residents' associations to veto the presence of tourist apartments in their buildings. This reform seeks to give residents greater control over the use of the properties in their surroundings, thus protecting the residential character of their communities.

These actions are part of a broader strategy to balance the real estate market and ensure that housing fulfills its essential purpose: to provide people with a home.