10 % VAT on holiday lets: start date uncertain · outer limit July 2028. On 2 October 2026 Congress voted down Royal Decree-law 26/2026, which had set 1 December 2026, so that date no longer stands. The outer limit comes from Directive (EU) 2025/516: July 2028. We have it ready for whenever it comes in. Meanwhile we keep handling what is already compulsory today: Form 303 for the reverse-charge VAT on Airbnb and Booking fees, the EU VAT number (ROI) and Form 349.
Three conditions, all at once
- Connection with the activity. The cost has to exist because you let the property.
- Evidence. A complete invoice in your name and with your NIF, the Spanish tax number every owner has. A till receipt does not qualify, however genuine the purchase.
- Record. Entered in your books and, if asked, paid in a traceable way. Cash payments of any size are the first thing questioned.
Miss one and there is no deduction. The one that fails most often is the second, and it fails in a predictable way: the invoice is in the name of the letting agent, or of one of two co-owners, or of a company that has nothing to do with the property.
The practical list
| Cost | Deductible? | Qualification |
|---|---|---|
| IBI, the annual local property tax, and the refuse charge | Yes | Apportioned by nights let |
| Service charge to the owners' association of the building | Yes | Apportioned; a levy for improvement works is capitalised instead |
| Electricity, water, gas, internet | Yes | Apportioned; the most frequently overstated |
| Cleaning between stays | Yes | In full: it only exists because of the letting |
| Booking platform commission | Yes | In full |
| Buildings, contents and rent-guarantee insurance | Yes | Apportioned |
| Repairs and maintenance | Yes | Distinct from improvement, which is depreciated |
| Furniture and appliances | Through depreciation | Normally 10 % a year |
| Depreciation of the building | Yes | 3 % on the greater of the construction cost or the rateable value of the construction, never the land |
| Mortgage interest | Yes | Interest only, never the capital repayment |
| Professional fees: accountant, lawyer, architect | Yes | Apportioned or in full depending on what they relate to |
| Your own time | No | Managing it yourself does not create a deductible cost |
| Fines, penalties and tax surcharges | No | Never, in any circumstances |
Repair or improvement: the distinction that moves the most money
Replacing a broken boiler with an equivalent one is a repair: deducted in the year it is paid. Enclosing a terrace, or rewiring the whole flat to a higher specification, is an improvement: it is added to the value of the property and recovered through depreciation over many years. The Spanish tax office looks hard at this whenever the amount is large, and the single most useful defensive document is a builder's invoice that describes the work in enough detail to show it restored rather than enhanced.
The boundary genuinely is blurred in places. Replacing old aluminium windows with modern double glazing is often treated as repair, because it substitutes an existing element; converting a storeroom into a second bathroom is not. Where the invoice bundles both, ask for it to be split before it is paid.
Depreciation, the deduction people forget
Depreciation of the building is worth more than most owners realise and costs nothing in cash. It is 3 % a year on the greater of the acquisition cost of the construction or the rateable value of the construction — and only the construction, because land is not depreciated. Your IBI bill splits the rateable value between land and construction, which gives you the percentage to apply to the purchase price. Furniture, appliances and fittings depreciate separately, typically at 10 % a year over ten years.
Costs may only be deducted by owners resident in the European Union, Iceland, Norway or Liechtenstein. An owner resident outside that group is taxed on the gross income, with nothing deducted at all. That is the difference between paying 19 % of your profit and 24 % of your turnover, and since Brexit it is the single largest issue for British owners. It is also why the certificate of tax residence matters so much: see the certificate of tax residence.
Apportionment, in one line
Annual cost × (nights let ÷ days in the period). This is why counting nights properly is not bookkeeping pedantry: it is what determines how much you actually deduct. The counting rules, the straddling booking and the treatment of your own use are in nights let and apportioning costs, and you can run your own figures in the apportionment calculator.
Costs that are always argued about
- Travel to the property. If it is far away and the trip has a demonstrable cause — a handover, works, an inspection — it can be defended. As a routine annual claim for a property in a place you happen to like, it will not survive.
- A car. Very hard for a letting business. Unless the property is one of several and the vehicle is genuinely dedicated, expect it to be disallowed.
- Fitting out at the start. The furniture bought before the first guest is capital, depreciated over years, not a cost of the first season.
- Anything paid in cash without an invoice. A cleaner paid cash weekly is the most common example, and it fails both the evidence and the traceability tests.
Where costs exceed income the excess is not lost, but the rules on carrying it forward differ between a resident owner and a non-resident one, and non-resident returns are filed per property, per owner and per period, which limits what can be offset against what. It is worth looking at before assuming a bad year cancels a good one.
What the paperwork has to look like
A complete Spanish invoice carries the supplier's name, address and NIF, your own name, address and NIF, a sequential number, a date, a description of what was supplied, the net amount, the VAT rate and the VAT amount. Anything missing one of those elements is a weaker document, and the ones that fail most often are the cleaner's handwritten note, the hardware shop receipt and the platform statement that summarises a month without itemising it.
Two habits fix almost all of this. Give every supplier your full details once, in writing, and ask for invoices rather than receipts from the first purchase. And download the platform's monthly settlement documents as they are issued rather than at the end of the year, because they are what evidence both the income and the commission, and access to old ones is not always straightforward.
Keeping the records the rules expect
You are expected to be able to produce, for each property and each year, a register of income with the bookings behind it, a register of costs with the invoices behind it, and the calculation that connects the two through the night count. That is not a formal accounting requirement for a passive letting, but it is what a review asks for, and it is the difference between answering a request in a week and spending two months reconstructing four years from bank statements.
Keep everything for at least four years from the end of the filing period, which is how long the tax office has to review. Where depreciation is involved, keep the purchase deed and the construction cost breakdown indefinitely: you will need them again when you sell, to calculate the gain.
Questions we get asked about your holiday let
Can I deduct the trip to check on the flat?
It is among the most argued. With a real, evidenced reason it can be defended; as a routine, no.
What about the days my family uses it?
They are not business days: they reduce the deductible proportion and, if you are not resident in Spain, they generate deemed income instead.
Do I need a proper invoice from the owners' association?
The association's receipt showing the breakdown of your share is accepted. Keep the minutes approving any one-off levy as well, because that is what shows whether it was maintenance or improvement.
I own the flat with my spouse. Whose name goes on the invoices?
Ideally both, in the ownership proportions. Each owner declares their own share, so an invoice in one name only creates an argument about the other half.