Madrid, Spain – 08/07/2015 – as published by The Wall Street Journal

MADRID—Tapas, shopping, beaches, the famous Gaudi architecture: Catalonia, and in particular its capital Barcelona, has a lot to entice tourists with. But a chance to live like a local and rent a room through Airbnb may soon no longer be one of them.

Catalonia’s regional government said Tuesday that Airbnb is in “serious” breach of regional law and that it has ordered the company to pay €30,000 ($41,000) in fines within the month or begin adhering to Catalan law.

A spokeswoman for the regional government said an official notification of the fine was delivered via email. It is the first E.U. administration to slap a fine on the popular apartment-sharing marketplace company.

Airbnb is part of what is becoming known as a growing “share economy” made popular by app technology and user-generated services.

However many such U.S. tech start-ups have received a frosty reception in Europe. In June thousands of taxi drivers in London, Paris, Berlin and Madrid, among others, protested against car-hailing service Uber which allows users to hail a privately licensed taxi through a smartphone app or organize a car share, often bypassing regulated taxi drivers.

The Catalonian government also announced that it is looking into ways to block the website from users with web addresses based in Catalonia, in the northeast of Spain.

The San Francisco-based Airbnb was among eight others fined for breaching regional laws in place since 2012 that say any apartment rented to tourists must be registered with the Tourism Registry of Catalonia, a body under the authority of the Tourism Ministry.

“Barcelona should stay on the cutting edge of innovation, and we’re disappointed to see a ruling that affects a number of companies and that will hold the city back,” said a spokeswoman for the company in Spain. Airbnb added that it will review the decision and consider its legal options.

In a statement, Catalonia’s government admitted that it doesn’t have legal powers to block Internet Protocol address (IP addresses), but said it may try to work with regional Internet providers to implement such a move.

While any potential block placed on Airbnb by the Catalonian government won’t affect the ability of people surfing the site from abroad who want apartments in Barcelona, it will affect some 4,000 Catalonians who have posted their apartments on the site.

Spain’s Industry Ministry, which oversees the country’s telecommunications, declined to comment on whether such a threat could be carried out.

Catalonia received 15.6 million tourists from outside of Spain in 2013. In an economic impact study conducted by Airbnb, the company estimates that it created 4,000 jobs and generated €128 million ($174 million) in Barcelona in the one year since starting up a Catalonian section of their site in April 2013.

Still, Spain’s central government and regions are traditionally wary of ceding control of the lucrative tourism industry, which accounts for over 10% of Spain’s gross domestic product. Catalonia is Spain’s number one region by number of annual foreign visitors, many of them northern Europeans.

Valued at an estimated $10bn, Airbnb was founded in 2008 and lists more than half a million private properties, including 600 castles, in 190 countries.

Last week around 600 protesters delivered a petition to the Mayor’s office signed by 3,000 small business owners encouraging him to legalize home sharing, which would allow residents to use services like Airbnb legally.

In May 2013 Barcelona’s city government opened 100 cases against individuals running “tourist apartments” after numerous complaints over rowdy visitors. These individuals faced fines of up to €90,000 for contravening a 2007 law ensuring access to housing, but a spokeswoman for the Catalan government could not say whether these individuals were connected to Airbnb.

Current regional laws also prohibit the renting out of rooms in private residences.

“Home sharing helps ordinary Barcelona residents earn a little extra money so they can pay the bills and families have relied on home sharing to stay in the neighborhood they love,” read a separate online petition signed by 1,500 people on the website change.org.