Spain Looks to Raise Taxes on Holiday Rentals

Spanish Prime Minister Pedro Sanchez announced plans on Monday to increase taxes on holiday rentals, Reuters reported, so they pay "like a business" as rents throughout the country have increased substantially in recent months.

"It isn't fair that those who have three, four or five apartments as short-term rentals pay less tax than hotels or workers," Sanchez said, according to Reuters.

Reuters reported the proposal would be based on a new European Union directive on value-added tax for digital platforms. Spanish hotels currently pay a reduced 10% value-added tax, a fee that is included in their charges. However, short-term rental platforms such as Airbnb face a different tax structure.

Sanchez also promised to crack down on fraud in the short-term rental industry, without providing any details. The Spanish government launched an investigation into Airbnb last month for failing to delete thousands of rental listings lacking licenses for tourism use.

The prime minister added that landlords in high-rent areas who keep in line with an official price index would receive a full tax exemption on that income.

The proposal to hike taxes on vacation rentals is just the latest in Spanish authorities' efforts to rein in the short-rental industry, which many in the country have blamed for housing shortages and soaring rents. Malaga's city council announced last October it would prohibit short-term rental registrations in 43 neighborhoods, while Barcelona mayor Jaume Collboni said last June the city would ban all short-term rentals by 2029.

And officials in Alicante approved a two-year ban on new licenses for short-term rentals last month.