Spain’s Big Tax Shift
Spain’s National Court (Audiencia Nacional) delivered a landmark ruling on 28 July 2025, striking down years of discriminatory tax treatment toward non‑EU landlords. The decision opens the door for significant tax relief and greater fairness in Spain’s real estate tax system.
What Changed and Why It’s a Win
Before the ruling:
– EU/EEA landlords could deduct expenses like repairs, insurance, utilities, and marketing, then pay tax at 19% on net rental income.
– Non‑EU landlords, however, were stuck paying 24% tax on their gross rental income with no deductions allowed.
After the ruling:
– Non‑EU landlords can now deduct rental-related expenses when filing the IRNR (Modelo 210 tax form), effectively aligning their treatment with that of EU landlords, although the 24% rate on net income remains unchanged for now.
What Counts as Deductible?
Allowable expenses now include (must be supported by invoices/receipts):
– Mortgage interest, IBI (property tax), community fees
– Repairs and maintenance (not capital improvements)
– Insurance, utilities, advertising, property management fees
– Agency commissions, depreciation (building—not land), and more
Retroactive Relief: Claim What You Overpaid
Non‑EU landlords now have the right to file amended tax returns (Modelo 210) and seek refunds for overpaid taxes for up to four years, typically covering 2021–2024.
Legal Context and Broader Impact
The court’s ruling was grounded in Article 63 of the Treaty on the Functioning of the EU, guaranteeing the free movement of capital and non-discrimination, even for third-country nationals.
This decision also sends a clear signal to Spanish lawmakers: discriminatory proposals like Prime Minister Pedro Sánchez’s proposed 100% “Complementary State Tax” on property purchases by non‑EU buyers are highly likely to be struck down as unlawful.
Why This Matters for Non‑EU Landlords
| Benefit | What It Means for You |
| Fairer tax base | Only pay tax on your actual profit, not inflated gross income. |
| Savings potential | Significant reduction in tax liability through deductions. |
| Refund opportunity | Retroactive claims could recoup substantial funds. |
| Policy safeguard | Strong precedent against future discriminatory taxes. |
Action Steps for Non‑EU Landlords
- Track and organize all invoices and receipts for allowable rental expenses.
- File new Modelo 210 returns including deductions for current and upcoming periods.
- Submit rectifications for prior tax years within the four-year window to claim refunds.
- Consider professional advice, as navigating filings and documentation for retroactive claims can be complex.
In Summary
Spain’s July 2025 Audiencia Nacional ruling marks a major step toward fair taxation for non‑EU landlords, allowing expense deductions and enabling refund claims. While the tax rate gap remains, the change ushers in fairness, opportunity and meaningful savings for international investors renting out Spanish property.
Thanks for reading!
Mikael, owner and founder of
