What is the non-resident tax in Spain and how does it work?
The non-resident tax in Spain is one of the levies that generates the most doubts among those who own a property in the country without being tax residents. It applies both to those who rent out their home and to those who keep it empty, as there is always a declaration requirement.
The key is that the regulation does not treat EU residents and non-EU residents equally. The former can deduct expenses on their rentals, while the latter are taxed on gross income.
📌 However, a ruling by the National Court on July 28, 2025, has introduced a potential change: allowing non-EU landlords to also apply deductions in the IRNR. Although the decision is not final, it is an important development that could transform the taxation of foreign property owners in Spain.
What is the non-resident tax in Spain, and who has to pay it?
The Non-Resident Income Tax (IRNR) taxes the income obtained in Spain by individuals or entities that are not tax residents.
In practice, it must be paid by:
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Foreigners who rent out a property in Spain.
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Foreigners who own a vacant property declare an imputed income.
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Foreign companies that generate income in Spanish territory.
👉 In short: if you are a non-resident owner, the non-resident tax in Spain will always affect you, whether you earn rental income or keep your property empty.
How is the non-resident tax in Spain calculated on rentals?
The calculation varies depending on the tax residence of the owner:
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Residents in the EU/EEA with information exchange agreements: taxed on net income, i.e., they can deduct expenses.
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Non-EU residents: taxed on gross income, with no possibility of deductions.
📊 Practical example with a rental of €2,000/month (€24,000/year):
| Concept | EU/EEA resident | Non-EU resident |
|---|---|---|
| Annual income | €24,000 | €24,000 |
| Deductible expenses (€10,000) | -€10,000 | €0 |
| Taxable base | €14,000 | €24,000 |
| Tax rate | 19% | 24% |
| IRNR quota | €2,660 | €5,760 |
👉 As you can see, the difference is significant: a non-EU landlord pays more than twice as much as an EU resident with the same property.
What expenses are deductible in the IRNR?
Expenses that can be deducted (only for EU residents) include:
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Mortgage loan interest is linked to the property.
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Repairs and maintenance.
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Local taxes such as IBI or garbage collection fees.
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Administration and management fees.
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Insurance and utilities when paid by the landlord.
Non-EU residents, until now, cannot deduct any of these expenses.
What happens if the property is not rented out?
The non-resident tax in Spain also requires declaring an imputed income when the property is empty.
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It is calculated by applying 1.1% or 2% of the cadastral value, depending on the last revision.
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Both EU and non-EU residents must declare it.
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In this case, no deductions are allowed.
👉 Even an empty property still generates tax obligations in Spain.
Why is there a difference between EU and non-EU residents?
Spanish law differs because the European Union requires equal treatment for EU/EEA residents.
For non-EU residents, there was no such requirement, so a harsher regime was applied. However, this criterion clashes with the principle of free movement of capital (Art. 63 TFEU), which also protects investments from third countries.
What does the new ruling say about non-EU landlords?
The National Court, in July 2025, recognized a U.S. landlord's right to deduct expenses in the IRNR.
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The Court considered the difference in treatment discriminatory.
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It ordered the law to be interpreted in accordance with European law.
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It recognized that non-EU residents must be allowed to deduct expenses on equal terms.
👉 But beware: the ruling is not final and may be appealed to the Supreme Court.
What does it mean in practice for foreign property owners?
For now, the law has not changed. Non-EU residents continue to be taxed on gross income.
However, this development opens up three scenarios:
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If the Supreme Court upholds the ruling, it would allow deductions and the possibility to claim refunds for non-prescribed tax years.
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If the Supreme Court overturns it, the current difference will remain in force.
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If lawmakers intervene, the rules could be modified to harmonize the tax regime.
What practical steps should you take as a non-EU landlord?
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Declare your income correctly to avoid penalties.
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Keep all documentation of expenses, even if not currently deductible.
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Consult a tax advisor specialized in non-resident taxation.
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Follow the legal developments closely, as the Supreme Court's decision will be decisive.
How does the non-resident tax in Spain affect real estate investment?
In areas such as the Costa del Sol, the non-resident tax in Spain has a direct impact on the net profitability of investments.
Comparison of net profitability with and without deductions:
Let us assume a rental of €24,000 per year, with €10,000 of deductible expenses:
| Scenario | Gross income | Deductible expenses | Taxable base | IRNR rate | Quota | Net profit |
|---|---|---|---|---|---|---|
| EU/EEA resident | €24,000 | -€10,000 | €14,000 | 19% | €2,660 | €11,340 |
| Non-EU resident (current) | €24,000 | €0 | €24,000 | 24% | €5,760 | €18,240* |
| Non-EU resident (if law changes) | €24,000 | -€10,000 | €14,000 | 24% | €3,360 | €10,640 |
*Note: in the current scenario, the net profit appears higher in the “mathematical” table, but it does not reflect the economic reality, because those €10,000 of expenses are still paid even if they are not deductible. In other words, the real cash flow would be €8,240.
👉 The difference can be decisive when investing in Spain or in another European country.
Conclusion: a key tax in full transformation
The non-resident tax in Spain is a fundamental levy for any foreign property owner. It defines much of the real profitability of real estate investments and makes the difference between investing in Spain or elsewhere.
Today, non-EU landlords remain at a disadvantage. But the recent ruling by the National Court opens the door for deductions to also be recognized for them in the future, achieving fairer treatment.
Ultimately, beyond the numbers, this is a matter of trust and legal certainty. Spain must offer a clear, competitive, and EU-aligned tax framework if it wants to continue attracting international investment.
FAQ
1. What is the non-resident tax in Spain?
It is the levy that taxes the income of foreigners with properties or earnings in Spain.
2. What tax rate applies in the IRNR?
19% for EU/EEA residents and 24% for non-EU residents.
3. Can non-EU residents deduct expenses?
Not yet, although there is a recent ruling that opens up this possibility.
4. What happens if I do not rent out my property in Spain?
You must declare an imputed income based on the cadastral value of your property.
5. Can refunds be claimed if the law changes?
Yes, for non-prescribed years (normally the last four years).
📌 Read everything about taxes and other legal aspects in our Buying Guide in Spain. There you will find complete and practical information to make decisions with confidence.
