Rental tax for non-residents in Spain

If you own a property in Spain and do not live here, you have tax obligations. And they are not simple. The Non-Resident Income Tax (IRNR) has its own rules, specific forms, rigid deadlines and a crucial distinction between EU and non-EU residents that a recent 2025 court ruling has just changed. This article breaks down everything you need to know to comply with the tax authority without paying more than you should.

What tax does a non-resident pay on rental income?

The tax levied on non-resident rental income in Spain is the IRNR — Impuesto sobre la Renta de No Residentes (Non-Resident Income Tax). It is not the IRPF (which is for residents). It is declared using Modelo 210 filed with the Agencia Tributaria.

Tax rates

• EU, Iceland or Norway residents: 19 % on net income (revenue minus deductible expenses).
• Non-EU/EEA residents: 24 % on gross income (no expense deductions). However, the Audiencia Nacional ruling of July 2025 has opened the door for non-EU residents to also deduct expenses — details below.

Deductible expenses (EU/EEA residents)

If you reside in the EU or European Economic Area, you can deduct from rental income the same expenses as a Spanish resident:

• Mortgage interest: the interest portion of the mortgage proportional to the rental period.
• IBI (property tax): the annual municipal property tax.
• Community fees: the monthly owners' community charge.
• Insurance: home insurance and civil liability insurance.
• Repairs and maintenance: costs to keep the property in rentable condition (not improvements that increase its value).
• Management and administration fees: property manager, letting agency, tax adviser fees.
• Depreciation: 3 % annually on the higher of acquisition cost or cadastral value of the construction (excluding land).
• Utilities: water, electricity, gas, internet — if paid by the owner, not the tenant.

The sum of these expenses reduces the taxable base, and the 19 % is applied only to the difference. If expenses exceed income, the base is zero — there are no carryforward losses.

The 2025 ruling: a change for non-EU residents

Until July 2025, property owners from outside the EU/EEA (post-Brexit British, Russians, Latin Americans, Americans) paid 24 % on gross rent with no expense deductions allowed. This discrimination was based on a strict interpretation of the IRNR law.

In July 2025, the Audiencia Nacional (National Court) issued a ruling recognising the right of non-EU residents to deduct rental expenses under the IRNR, considering that the prohibition constituted unjustified discrimination. The ruling is based on the free movement of capital principle in the Treaty on the Functioning of the EU, which also protects third countries.

What does it mean in practice?

• Non-EU residents can now deduct the same expenses as EU residents when declaring rental income.
• The tax rate remains 24 % (unchanged), but it applies to net income instead of gross.
• The difference can be enormous: if your income is €12 000 and your deductible expenses are €5 000, you pay 24 % on €7 000 (€1 680) instead of 24 % on €12 000 (€2 880). A saving of €1 200 per year.

Is it final?

The Audiencia Nacional ruling sets a strong precedent, but the tax authority could appeal to the Supreme Court. Meanwhile, specialised tax advisers are already filing returns with expense deductions for non-EU residents and, in many cases, requesting amendments for the previous four unprescribed years.

An empty property is also taxed

An aspect many non-residents are unaware of: even if your flat is empty and generates no income, you must pay tax on an imputed income. The tax authority considers that simply owning a property in Spain generates a notional income that must be declared.

• Imputed income: 2 % of the property's cadastral value (or 1.1 % if the cadastral value has been revised in the last 10 years).
• Tax rate: 19 % (EU/EEA) or 24 % (non-EU) on the imputed income.

Example: if your flat has a cadastral value of €80 000 (revised), the imputed income is €880 (1.1 %). The tax would be €167 (19 %) or €211 (24 %). Not much, but it accumulates and penalties for non-filing can be proportionally steep.

How and when to file

Modelo 210

This is the IRNR form. It is filed electronically with the tax authority. You need a NIF (which you will already have if you bought the property) and a digital certificate or Cl@ve PIN to access the system.

Deadlines

• Rented property: Modelo 210 is filed quarterly (within the first 20 days of the following quarter). If tenants change or there are unrented periods, the quarterly calculation is adjusted proportionally.
• Empty property (imputed income): declared annually, before 31 December of the following year.

Tax representative

If you reside outside the EU/EEA, Spanish law requires you to appoint a fiscal representative in Spain — a person or entity that acts as the liaison with the tax authority. It is not optional. Failure to appoint one can trigger penalties and complicate notifications.

EU/EEA residents are not obliged to have a representative, but in practice most hire a Spanish tax adviser to manage their returns.

Wealth Tax

In addition to the IRNR, non-residents with property in Spain whose value exceeds certain thresholds may be subject to Wealth Tax. In the Valencian Community, the exempt minimum is €500 000 (net value, deducting mortgage debts). For most investors with a single Costa Blanca property, it does not apply. But if you have multiple properties or a high-value asset, consult an adviser.

Double taxation

Spain has double taxation agreements with over 90 countries. If your country of residence also taxes rental income earned in Spain, the agreement provides mechanisms to prevent you from being taxed twice on the same income. Typically, taxes paid in Spain are deducted from your tax liability in your country of residence.

Countries with agreements include: UK, Germany, France, Italy, Netherlands, Belgium, Sweden, Norway, Finland, Russia, USA, Canada, Mexico, Colombia, Argentina, among others. If your country does not have an agreement with Spain, double taxation can be a real issue — check before investing.

Frequently asked questions

Can I deduct property depreciation?

Yes, if you are an EU/EEA resident (and after the 2025 ruling, likely also if you are not). Deductible depreciation is 3 % annually on the higher of acquisition cost (excluding land) or the cadastral value of the construction. It is a 'non-cash' expense that significantly reduces the taxable base.

What happens if I do not file?

The tax authority cross-references data with the Land Registry, banks and rental platforms. If it detects you own a property in Spain and have not filed Modelo 210, it can impose penalties of 50-150 % of the unpaid tax, plus late-payment interest. The limitation period is 4 years from the end of the filing deadline.

Do I need a NIE to file?

Yes. Every non-resident with tax obligations in Spain needs a NIF (Tax Identification Number). For foreign individuals, the NIF is the NIE (Foreigner Identity Number). You will have obtained it when purchasing the property, as it is a requirement for the deed.

Can I apply the 60 % reduction that residents get?

No. The 50-60 % reduction for letting a primary residence is an IRPF (resident) benefit only. Non-residents are taxed under the IRNR, which does not include this reduction. This means that, in practice, a resident can pay less tax than a non-resident on the same rental income.

How does Brexit affect British owners?

Since 1 January 2021, UK residents are non-EU for IRNR purposes. This meant paying 24 % on gross rent with no expense deductions. The July 2025 ruling partially mitigates this by opening expense deductions to non-EU residents. British owners should consult a Spanish tax adviser to review their returns and request retroactive amendments if appropriate.

Tax is one of the most complex aspects of property investment as a non-resident. If you are considering investing on the Costa Blanca, explore our available properties or contact us for a personalised consultation.