A major breakthrough for property owners in Spain who reside outside the EU or EEA

A recent decision by the Spanish National Court (Audiencia Nacional) is set to reshape the tax treatment of non-resident landlords in Spain — especially those from outside the European Union or European Economic Area. Until now, non-EU non-residents who rent out property in Spain faced a significant disadvantage compared to their EU counterparts: they were prohibited from deducting any related expenses from their Spanish rental income.

On July 28, 2025, the Court issued a landmark ruling declaring this restriction contrary to European Union law, specifically Article 63 of the Treaty on the Functioning of the European Union (TFEU), which enshrines the free movement of capital.

What Does This Mean for You?

If you are a non-resident taxpayer from outside the EU/EEA who owns rental property in Spain, this ruling could entitle you to significant tax refunds or at the very least allow you to reduce your future tax liability.

Under this new judicial interpretation, non-EU landlords should be allowed to deduct ordinary and necessary expenses, such as:

• Depreciation of the property
• Community of owners’ fees
• Repairs and maintenance
• Property taxes, insurance premiums, and municipal fees
• Other costs directly related to the rental activity

This represents an important step toward tax equality and may serve as a precedent for future claims and further legislative reform.

What the Court Said – And What It Didn’t

While the judgment is a welcome change, it’s important to understand its current scope and limitations:

• It affirms that disallowing deductions solely on the basis of residency outside the EU violates EU law.
• It does not yet address other disparities, such as:

• The difference in tax rates (24% for non-EU vs 19% for EU taxpayers).
• The inability to apply the 50% reduction for income from residential leases (alquiler de vivienda habitual).

These issues remain pending and may be addressed in future litigation or legislative changes.

Caution: Not the Final Word

While this decision sets a strong precedent, it is not yet final or binding nationwide. The ruling comes from the National Court and may still be appealed to the Spanish Supreme Court (Tribunal Supremo). Therefore, taxpayers should not assume automatic entitlement to refunds or deductions without first seeking legal advice.



That said, the decision strengthens the position of non-EU taxpayers who wish to challenge their tax assessments or file protective claims.

What Should You Do Now?

Given the positive but evolving nature of this case law, we recommend the following:

1. Review your past Non-Resident Income Tax (IRNR) filings, especially for the last four non-prescribed tax years.
2. If you were denied the right to deduct expenses, consider filing an appeal or protective claim to preserve your rights.
3. For future filings, speak to a professional about deducting your legitimate rental expenses based on this ruling.
4. Keep in mind that tax rates and allowances may still differ based on residency, and further challenges may be necessary to resolve other forms of discrimination.

How We Can Help

At SamirLaw, we assist non-resident property owners in ensuring compliance with Spanish tax law while maximizing their allowable deductions and rights. With deep experience in cross-border tax advisory, we are closely following the evolution of this case and can assist you in:

• Reviewing your past IRNR filings
• Preparing and submitting refund claims or protective appeals
• Ensuring your future filings comply with the latest developments
• Advising on broader non-resident tax obligations, including Modelo 210 and Modelo 720

If you own rental property in Spain as a non-resident and are unsure how this affects you, contact us for a consultation.