Note: This article reflects 2026 rules and is undergoing final review by María Luisa de Castro (ICA Cádiz nº 2745). Specific figures and thresholds should be confirmed for your case — book a consultation or email marialuisa@costaluzlawyers.es.
Most landlords know rental income is subject to income tax — far fewer realise that some Spanish rentals also carry VAT (IVA), or IGIC in the Canary Islands. Get it wrong and you face back-taxes and penalties; the rule turns on how you let, not just that you let. The short version: a normal residential let is VAT-exempt, but a tourist let that includes hotel-style services is not. This guide explains where the line sits and how it differs across Spain.
The Default: Residential Lets Are VAT-Exempt
A long-term residential lease — a property let to a tenant who lives there as their main home — is exempt from VAT under Spain’s VAT law (Ley del IVA). You do not add VAT to the rent and you do not file VAT returns for it. The income is still subject to income tax (IRNR for non-residents), but not to IVA.
The same VAT exemption generally covers a short-term or holiday let where you provide only basic services: handing over keys, and cleaning and changing linen between guests. Letting the property and nothing more keeps you outside the VAT system.
The Trap: Tourist Lets With Hotel-Type Services Carry 10% VAT
The exemption falls away the moment you provide hotel-type (complementary) services during the guest’s stay. If you offer things a hotel would — reception or guest-reception services, cleaning and linen changes during the stay (not just between guests), meals, or similar hospitality — your activity is treated like accommodation services, and you must charge 10% VAT (the reduced rate) on the rental invoice.
That changes your obligations completely. You must:
- Register the activity for tax (alta censal, Modelo 036/037)
- Charge 10% VAT on each booking and issue compliant invoices
- File periodic VAT returns (Modelo 303) and the annual summary (Modelo 390)
The distinction is precisely the kind of detail that is easy to miss and expensive to correct. If you are buying with tourist letting in mind, factor it in early — see buying property in Spain to rent out.
IGIC Instead of VAT in the Canary Islands
The Canary Islands sit outside Spain’s VAT territory. There, the equivalent indirect tax is IGIC (Impuesto General Indirecto Canario), which has its own — generally lower — rates than mainland IVA. A Canary Islands tourist let with hotel-type services is taxed under IGIC rather than IVA, with its own registration and filing rules. Ceuta and Melilla use a third system, IPSI. If your property is in the Canaries, do not assume mainland VAT rules or rates apply.
What Is Changing: VAT on Short-Term Rentals from 2028
A reform is on the way. From 1 July 2028, Spain is set to apply VAT to short-term tourist rentals (broadly, stays of 30 nights or fewer) even where no hotel-type services are provided. In other words, the “no services, no VAT” route is expected to close for short-stay tourist lets. The detail will firm up before it takes effect, but owners planning a tourist-let investment should price in this future cost now rather than be surprised by it.
How QuickLease Can Help
QuickLease is CostaLuz Lawyers’ rental-compliance check. As part of confirming whether and how a property can be let, we flag the indirect-tax position too: whether your intended letting model would fall inside VAT or IGIC, what registrations that triggers, and how the 2028 change may affect your plans. You learn the full compliance cost — income tax and indirect tax — before you commit. For the income-tax side, see our non-resident rental income tax guide.
QuickLease is a compliance review and does not replace personalised tax advice on your own figures.
Send Documents for Free Initial Review →
This article provides general information about Spanish indirect taxation and is not definitive legal or tax advice. VAT/IGIC treatment depends on the precise services you provide and your region; obtain advice on your specific case before acting.
Reviewed by María Luisa de Castro de Castro, Expert in Off-Plan Property Investment, CostaLuz Lawyers (Ilustre Colegio de Abogados de Cádiz no. 2745). CostaLuz Lawyers has supported the international community in Spain since 2006.
Related Reading
AI Disclosure: This article was drafted with AI assistance and reviewed and approved by CostaLuz Lawyers prior to publication. Last reviewed: June 2026.
This article provides general guidance only and does not constitute legal advice. For personalised advice tailored to your specific situation, please book a consultation with our team.
Related Guides
This content has been prepared with the assistance of artificial intelligence and reviewed by María Luisa de Castro, a lawyer specialising in Real Estate Law and founder of CostaLuz Lawyers.
The information provided is general and indicative in nature. It should not be used as the sole basis for making professional, legal or investment decisions, and CostaLuz Lawyers assumes no responsibility for decisions taken solely on the basis of this content.
We always recommend personalised review by a qualified professional. For most of our services, initial personalised guidance is free of charge. Get in touch.