Landmark Court Victory for Non-EU Property Owners in Spain

On July 28th, 2025, the Spanish Audiencia Nacional issued a groundbreaking judgment—SAN 3630/2025—that marks a turning point for non-resident property owners in Spain. For years, non-EU and non-EEA residents who owned and rented properties in Spain faced discriminatory tax treatment compared to EU residents. This ruling directly addresses that inequality and carries major implications for anyone investing from outside Europe.

What Was the Issue?

Traditionally, if you were a resident of the EU or EEA renting out Spanish property, the law allowed you to deduct legitimate expenses—maintenance, repairs, insurance, utilities—from your rental income when calculating Spanish Non-Resident Income Tax (IRNR, Modelo 210). This meant you only paid tax on your net rental income, at a 19% rate.

If you were a non-resident outside the EU/EEA (for example, U.S., UK, Canadian, Swiss, or Australian), the reality was much harsher. You couldn’t deduct any expenses, and you paid a higher tax rate of 24% on the gross rental income.

What Did the Court Say?

The Audiencia Nacional declared that denying non-EU owners the ability to deduct their real expenses violates EU law—specifically, Article 63 of the Treaty on the Functioning of the European Union, which guarantees free movement of capital and non-discrimination. Discriminatory tax rules that burdened non-EU residents ran counter to this principle.

As a result, non-EU property owners renting out in Spain can now deduct their expenses when filing IRNR (Modelo 210), just like their EU and EEA counterparts.

Does the Tax Rate Also Change?

Not yet. The ruling affects expense deductions, but the tax rate for non-EU residents remains at 24%. There are ongoing appeals and legal cases that may, in the future, expand equal rates and further deductions—so watch this space.

Can Non-EU Owners Claim Refunds for Previous Years?

Yes! If you’ve paid tax without deducting expenses in recent years, you may be eligible for refunds as far back as four years (the legal limit before expiry). To do so, you should file for rectification of previous Modelo 210 returns and claim a refund for undue payments.

What Should Non-Resident Landlords Do Now?

• Prepare to deduct eligible rental expenses (community fees, repairs, insurance, utilities, etc.) in your next Spanish non-resident tax return (Modelo 210).
• Review and potentially reclaim taxes overpaid in recent years.
• Seek professional advice to optimize your filings and ensure compliance.

Why It Matters

This decision levels the playing field for thousands of non-European owners and signals progress towards ending longstanding discrimination in Spanish tax rules. It’s big news for anyone thinking of investing, or already invested, in Spanish property from outside the EU.

If you own or plan to buy property in Spain and live outside the EU or EEA, now is the time to review your tax situation and ensure you’re claiming the deductions—and rights—you’re entitled to.

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