A recent ruling by Spain’s National Court has changed the landscape for non-EU property owners renting out homes in Spain. For the first time, they may deduct legitimate rental expenses in the same way as EU residents – and, importantly, may be able to claim refunds for taxes overpaid in previous years.
Until now, non-EU landlords were obliged to pay 24% tax on gross rental income, without any possibility of offsetting costs such as repairs, insurance, community charges, agency fees or mortgage interest. EU/EEA landlords, by contrast, have long been allowed to deduct these expenses and are taxed at a lower rate of 19% on net income.
On 28 July 2025, Spain’s National Court ruled that this two-tier system is unlawful, invoking Article 63 of the Treaty on the Functioning of the EU, which protects the free movement of capital and prohibits discriminatory treatment based solely on residence.
This judgment effectively puts non-EU landlords on equal footing with EU owners in terms of expense deductions.
Future filings: Non-EU landlords can now submit Modelo 210 returns on a net income basis, deducting documented costs that are directly linked to generating rental income.
Refunds for past years: Where tax was overpaid on gross rent, there is now a pathway to request rectifications and refunds – typically going back up to four years, depending on statutory deadlines.
1. Collect your records:
• Past Modelo 210 returns.
• Tenancy agreements, rent ledgers and receipts.
• Invoices for deductible expenses (maintenance, IBI, community fees, insurance, agency commissions, utilities, mortgage interest, etc.).
2. Recalculate income: Ask a tax adviser (asesor fiscal) to re-run the numbers, applying deductions correctly.
3. File rectifying returns: Submit amended Modelo 210s for each open year, attaching a reference to the National Court ruling of 28 July 2025 and Article 63 TFEU.
4. Monitor developments: Keep copies of all documentation and watch for updates in case Spain’s government appeals the ruling to the Supreme Court, which would need to ratify the decision.
Points to keep in mind
– The headline tax rates remain unchanged: EU/EEA residents at 19%, non-EU residents at 24%.
– The long-term rental reduction (50–60%) still applies only under Spanish IRPF, not to non-residents under IRNR.
– An appeal may follow, so while claims can be filed now, landlords should be aware that some refunds may depend on a final confirmation by the Supreme Court.
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