Ref. Ares(2020)2245669 - 27/04/2020
DG Internal Market, Industry, Entrepreneurship and SMEs (DG GROW)
Unit E1 – Services Directive and Policy
10 February 2020
Re: The Services Directive Notification (IMI report No 92633.1) on “Draft Regulation No 1/2019 of
the Formentera Island Council regulating the marketing of tourist accommodation in residential
dwellings” by Spain
On behalf of the European Holiday Home Association (EHHA), which is a united voice for short-term
rentals, we would like to draw your attention to the Services Directive notification (IMI report No
92633.1) on “Draft Regulation No 1/2019 of the Formentera Island Council regulating the marketing
of tourist accommodation in residential dwellings” (Proyecto de Reglamento 1/2019 del Consell
Insular de Formentera por el cual se desarrolla la actividad de comercialización de estancias turísticas
en Viviendas)1 as notified by Spain on 11 November 2019.
The draft Regulation No 1/2019 as approved by the Formentera Island Council in January, 2019 is
based on the Law 8/2012 of 19 July 2012 on tourism in the Balearic Islands and its implementing
legislation which foresee excessive and restrictive measures to short-term rentals in the islands. The
sector is deeply concerned that the trend to impose discriminatory
, unproportionate and
measures to short term rentals in the Balearic Islands continues which as a result puts in
jeopardy the whole short-term rental business and at the same time consumers choice.
Although the Formentera Island Council affirms that the notified articles are not discriminatory, EHHA
is convinced that the regulation does de facto
discriminate by imposing a ban that only targets people
who want to use their property rights fully and offer their dwellings for touristic uses. Moreover, the
Formentera Island Council did not provide any concrete evidence or a causal link which would
demonstrate that allowing: (i) persons other than the property owners, and (ii) persons that own more
than three dwellings to offer short-term rental services, are a serious threat to the rights of other
owners or residents of the same building. In addition, the Formentera Island Council did not
demonstrate that the alleged negative externalities associated with touristic accommodations (e.g.
public order problems, etc.) would be exclusively generated by the provision of short-term rental
services, whereas such externalities are generally common to all kinds of accommodations. Banning
or imposing restrictive policy measures with bias against short-term rental services without assessing
the variety of factors that contribute to context, raises a question of suitability of the law2 as targeting
solely the short-term rental sector would not contribute meaningfully to overall policy goals.
1 Proyecto de Reglamento 1/2019 del Consell Insular de Formentera por el cual se desarrolla la actividad de
2 ECJ Case C‑377/17 of 4 July 2019, website: http://curia.europa.eu/juris/document/document.jsf;jsessionid=6CA03958B344BE806B9444D00E377B14?text
Although the Formentera Island Council did not notify articles 2.3, 2.4, 2.5, 2.6, 5.1, 5.7, 6, 7, 8. 9, 10,
12, 13, 14, 16, 17, 21, 24, and 25 of the Draft Regulation, these provisions set a series of restrictions
and limitations to the short-term rental services, that, EHHA believes, violate the EU principles such
as the freedom to provide services and the freedom of establishment. These provisions impose,
among others: (i) detailed requirements for short-term rentals3; (ii) time consuming registration
requirements4; (iii) zoning and other types of similar local rules5; and (iv) specific requirements for STR
In addition, as a sector, we would like to draw your attention to a report7 on the Draft Regulation No
1/2019 issued by the Spanish Competition Authority (Comisión Nacional de los Mercados y la
Competencia - CNMC) on 27 June 2019:
● Limitation of zones for some operators.
Article 2.2 of the Draft Regulation No 1/2019
indicates that vacation rentals must be located in residential dwellings (suelo residencial) only
in areas declared suitable (these are defined by the Territorial Island Plan of Formentera (Plan
Territorial Insular)). The CNMC considers that such limitations imposed solely to short-term
rentals will “safeguard traditional tour operators, mostly present in tourist areas where these
other competitors are excluded, creating geographic barriers within the local and regional
● Limitation of number of short-term rentals.
In addition to the aforementioned Territorial
Island Plan, Articles 2.2, 5 and 15 limit a number of short-term rentals in residential dwellings
(they had to have a residential use before 27 October 2010) to 8.504. CNMC highlighted that
the number of tourist accommodation in residential dwellings has not been justified, nor the
difference between the number of hotels, hostels and tourist apartments (12.081) and short-
● Limitation on duration of stay.
Article 2.4 limits the maximum duration of each short-term
rental stay to 30 days and article 3.2.d limits the marketing of a rental in one's primary dwelling
to 60 days a year. These restrictions are already noted in the Law 8/2012 on tourism in the
Balearic Islands. The CNMC recommends to re-think these limitations through the necessary
● Authorization scheme.
Article 12 notes that the short-term rental activity is subject to a
formal declaration to initiate the activity, however, CNMC highlights that there are several
other requirements in addition to fulfil that turns the declaration into an authorization regime.
● Limitation of number of authorizations by the same owner.
Article 18.2 notes that the same
owners cannot submit another formal declaration to initiate a short-term rental activity if they
are also owners of three houses already marketed as short-term rentals. CNMC considers that
such limitation has not been justified properly.
3 Articles 6, 7, 25 of the Draft Regulation (e.g., number of bathrooms dwellings have to have, requirements to
have water sensors that impede leakage of water, type of light bulbs, provision of a first kit aid, type of plants
dwellings may have, etc.).
4 Articles 9, 10, 11, 12, 13, 16, 17, 18, 24 of the Draft Regulation (registration consists of submitting a statement
of responsibility, which has to be accompanied by a number of ancillary documents and certificates).
5 Articles 2, 3, 5, 8 of the Draft Regulation (e.g., limitations to certain seasons of the year, requirement for STR
to have an access directly from the public domain).
6 Articles 21 and 22 of the Draft Regulation (e.g., platforms are held liable for any STR advertisement which does
not display the registration number)
7CNMC. IPN/CNMC/019/19 Informe sobre el Proyecto de Reglamento del Consell Insular de Formentera por el
que se desarrolla la actividad de comercialización de estancias turísticas en viviendas. Website: https://www.cnmc.es/sites/default/files/2576500_11.pdf
● Requirement for marketing companies.
According to the article 21, marketing companies
must have a civil liability insurance of a minimum amount of 300,000€ and they must
designate an address in the island different to the marketed dwellings. CNMC considers that
a high amount of the insurance is not justified and the obligation to designate the address in
the island violates the EU freedom to provide services.
● Further quality requirements for short-term rentals.
Articles 6, 10 and 11 establish very
specific obligations on what kind of equipment have to be present in short-term rentals (for
example, a toaster or a specific number of forks). CNMC highlights that such exhaustive
obligations to presumably keep up the quality are not justified and limit the existence of
different types of accommodation with different facilities and prices. CNMC is convinced that
such obligations create market access barriers and limit the choice for consumers.
In the light of the above, EHHA is concerned that the Draft Regulation No 1/2019 further deepens the
existing unjustified and unproportionate measures to short term rentals in the islands and in this
regard impedes the proper functioning of a fair competition.
We remain open at your disposal should you have any questions.