Spain’s 2025 Tax Ruling for Non-EU Property Owners

Spain News Published: 17 September 2025 17:53 CET

A recent verdict by Spain’s National Court is making headlines for ending years of tax discrimination against non-EU property investors. For the first time, landlords from outside the EU—Britain, America, Canada, Australia, and more—can directly deduct property expenses from rental income before calculating their Spanish tax bill. But beyond the headline, what does this ruling actually mean for international owners, and how can you benefit or avoid potential pitfalls?

What’s Now Deductible—And What Happens If You Act?

Non-EU owners can subtract costs like repairs, community fees, loan interest, insurance, local taxes, and even annual depreciation when reporting rental income for tax. This applies whether you’re short-letting to holidaymakers or running a long-term tenancy.
For many, this change means the quarterly Modelo 210 tax return now covers net rental income (after expenses), not gross—possibly slashing annual bills by 30–60%, especially for older or heavily mortgaged properties.
Past overpayments may be reclaimable. If you declared gross rental figures for any year since 2021, legal advisors recommend filing a corrective return ASAP—Spanish law gives you four years to amend and seek refunds.

Risks and Opportunities Most Media Missed

The basic tax rate for non-EU landlords remains at 24%, not the 19% enjoyed by EU citizens. And while deductions are now legal, the 50% rental income reduction for long-term residential lets is still unavailable to non-EU owners.
This ruling is precedent-setting but not yet fully entrenched nationwide. Spain’s Supreme Court may review it—wise landlords should keep records sharp, submit corrections promptly, and plan for more detailed documentation in any future audits.
Non-EU buyers need to watch for parallel legislation—2025 brought proposals for a 100% “purchase tax” or higher surcharges on second homes for non-EU residents. These policies have yet to pass, but remain a risk for the coming year.
Make sure expense claims are genuine, well-documented, and directly tied to rental activity. Over-claiming or vague deductibles could flag your return for review.

What Should International Owners Do Now?

Review past quarterly Modelo 210 filings for any property you’ve rented out since 2021. Gather invoices, bills, loan statements, and insurance records for all valid expenses.
Consult a bilingual Spanish tax advisor—returns and refund requests require precision, and local law firms are now seeing a surge in cases.
If planning to buy in Spain, factor in this new net-income regime, but also look ahead to any new transfer taxes, rules, or limits proposed for non-EU buyers in popular regions.
Keep copies of all bank transfers and contracts; audits and local checks are expected to rise as Spain harmonizes its tax system for residents and foreigners alike.

Bigger Picture for Expats and Investors

This change makes Spain’s buy-to-let and rental holiday market more attractive for investors beyond the EU, offering transparency, potential refunds, and a more balanced legal environment. However, new buyers should stay aware of pending tax proposals and ensure property ownership is compliant, legal, and supported with solid documentation from day one.

For expert help or tailored calculations, get advice before your next filing—and stay proactive as Spanish tax law evolves.

Health Insurance for Property Owners and Expats

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