Spain's Bold Move: Tax Hikes Targeting Holiday Rentals

Spanish Prime Minister Pedro Sanchez announced plans to raise taxes on holiday rentals to align with business taxation, citing unfair advantages compared to hotels. The initiative, based on a new EU VAT directive, aims to address the housing crisis exacerbated by short-term tourist rentals. Protests highlight citizens' concerns over housing affordability.

In a significant policy shift, Spain's Prime Minister Pedro Sanchez revealed plans to impose higher taxes on holiday rentals, ensuring they are taxed similarly to businesses. The move addresses the mounting grievances of residents in Spain's major cities, who are struggling with skyrocketing rents.

At an event focused on affordable housing, Sanchez emphasized the inequity faced by residents, pointing out that those owning multiple short-term rentals benefit from lower taxes compared to hotels. This initiative will align with a new EU directive on value-added tax for digital platforms. Currently, Spanish hotels are subjected to a reduced 10% VAT rate.

To combat the housing crisis, exacerbated by gentrification and short-term rentals, the government plans to promote social housing and support landlords maintaining rents per official guidelines. However, Sanchez's proposals face pushback in a divided parliament, revealing the challenges of enacting housing reforms.

(With inputs from agencies.)