Directive (EU) 2025/516 introduces a significant reform in the VAT scheme applicable to short-term rentals, which is set to take effect on July 1, 2028. The reform will mean that rentals of accommodation to the same person for a maximum of thirty nights will be subject to VAT, on the basis that this type of rental has a similar function to the hotel sector. In addition, the role of digital platforms in collecting VAT is strengthened. It will be necessary to closely monitor the adaptation of this Directive to Spanish law in order to determine its final scope.
The leasing of properties intended exclusively for housing is exempt from VAT, unless the lessor provides supplementary services specific to the hotel industry. In such cases, the lease is subject to and not exempt from VAT, and is taxed at the reduced rate of 10%.
However, Council Directive (EU) 2025/516 of March 11, 2025, amending Directive 2006/112/EC as regards VAT rules for the digital age (published on March 25, 2025) marks the end of the VAT exemption for short-term rentals. Accordingly, these rentals will become subject to and not exempt from VAT, even if they are not accompanied by supplementary services specific to the hotel industry.
The aim of the Directive is to address the distortions in competition that have arisen from digital platforms entering the short-term rental market.
The change proposed by the Directive specifically affects the rental of accommodation to the same person for a maximum of thirty nights, on the basis that this type of rental has a similar function to the hotel sector.
Member States will, however, have the option of making short-term accommodation rental services subject to certain criteria, conditions, and limitations in accordance with their national legislation.
In addition, the Directive modifies the role of digital platforms in VAT collection, making them responsible for charging and collecting VAT on accommodation rental services provided through their electronic interfaces. However, to preserve the neutrality of VAT, platforms will not be considered taxable persons and therefore will not be required to charge VAT when the underlying suppliers provide a VAT identification number and declare that they will charge the VAT due on the supply of this rental service.
These changes will take effect on July 1, 2028, and each Member State must adapt its national legislation before that date.
In Spain, the Socialist Parliamentary Group presented a non-government bill in May 2025 to incorporate the mandate of the Directive. As established in this non-government bill, short-term rentals (those not exceeding thirty nights) carried out in municipalities with more than 10,000 inhabitants would be taxed. Also, the standard rate of 21% would apply.
As of the date of publication of this article, the non-government bill is still passing through parliament.
In short, the Directive represents a substantial change in the treatment of VAT applicable to short-term rentals, with a significant impact on both lessors and digital platforms. However, to ascertain the specific impact of this measure, it will be necessary to monitor how each Member State adapts the Directive to its national legislation.
Antonio Soler Thomas
