Spain has introduced a significant change to how non-EU property owners are taxed on rental income. The update aligns non-EU landlords with EU residents, marking a major policy correction that directly affects investors from the UK, United States, Canada, and other non-EU countries.
Previous Framework
Until July 2024, non-EU residents renting out property in Spain were taxed at a flat rate of 24% on gross rental income.
No expense deductions were permitted.
All operational costs—utilities, maintenance, management fees, and community charges—were disregarded when calculating taxable income.
By contrast, EU-based property owners benefited from the ability to deduct legitimate expenses before taxation, resulting in significantly lower effective tax rates.
Judicial Ruling: Equal Treatment Granted
A Spanish High Court resolution dated July 25, 2025 has redefined the taxation model for non-EU property owners.
The ruling confirmed that the prior system breached the principle of equal treatment and extended the same deductible rights to non-EU landlords as previously granted to EU citizens.
This decision now allows all genuine, verifiable rental expenses to be deducted from gross income before tax is applied
Practical Implications
Non-EU property owners remain subject to the 24% income tax rate, but only on net rental income after deducting:
- Community fees
- Utilities (electricity, water, internet, etc.)
- Maintenance and property repairs
- Management or agent costs
The change improves post-tax returns on rental investments and levels the fiscal framework between EU and non-EU owners.
Refund Eligibility for Previous Tax Payments
Property owners who paid 24% tax on gross income in prior fiscal years may qualify for a partial refund.
Eligibility depends on submission of prior declarations, documented evidence of expenses, and adherence to statutory claim periods.
Required Steps for Compliance and Reclaim
- Review past tax declarations to identify years where no deductions were applied.
- Compile invoices and receipts substantiating eligible expenses.
- Consult a qualified tax professional to initiate refund claims or apply the new deduction system in future filings.
Proper documentation and timely filing are essential for acceptance by Spanish tax authorities.
Mitchell’s Prestige Properties
Mitchell’s Prestige Properties provides insight-driven guidance for international property owners navigating Spain’s evolving legal and tax frameworks.
Working with experienced legal and tax specialists, the firm ensures its clients remain compliant while maximising financial efficiency across their real estate portfolios on the Costa del Sol.
