CA
Spain’s National Court opens the door to significant tax savings
A recent ruling by Spain’s National Court has recognized the right of non‑EU non‑residents (those living outside the European Union or the European Economic Area) to deduct expenses related to the rental of properties located in Spain.
This development directly benefits foreign non‑resident landlords who declare their rental income through Form 210 of the Non‑Resident Income Tax (NRIT).
What has changed with this National Court ruling?
Until July 2025, non‑EU non‑residents with rental properties in Spain were required to declare gross rental income without being able to deduct expenses (maintenance, repairs, taxes or mortgage interest). In contrast, EU‑resident landlords were allowed to deduct these expenses for the NRIT.
The National Court held that this difference infringes the free movement of capital set out in the Treaty on the Functioning of the European Union and that, therefore, non‑EU non‑residents must receive equal tax treatment.
What are the benefits of this change?
This change effectively reduces the tax payable by many foreign landlords. From now on, if you live outside the European Union but own rental property in Spain, you may deduct expenses related to the rental, which lowers the taxable base and, therefore, the final NRIT liability.
Deductible expenses include:
- Mortgage loan interest
- Community fees, insurance and taxes such as property tax (IBI)
- Repairs, maintenance or conservation of the property
- Management, brokerage or administration fees
- Utilities and services directly related to the rental
In practice, this may result in substantial tax savings.
Who can benefit?
- Non‑EU non‑residents, i.e. citizens of countries outside the European Union (for example, the United Kingdom, Switzerland, the United States, Canada, Latin America, Asia, etc.)
- Individuals who rent out a property located in Spain and declare their income using Form 210
- Taxpayers who filed returns in the last 4 years without applying deductions, as they may request a correction of the tax paid for non‑statute‑barred years
How to apply the NRIT expense deduction, step by step
Taxpayers may request a review of their Form 210 returns corresponding to the most recent non‑statute‑barred tax years (usually 4 years), providing supporting documentation for the deductible expenses.
Likewise, new NRIT filings may already include the deduction of expenses, provided they are duly justified and linked to the rental of the property.
The J.F. LEGAL CONSULTING team, specialized in international taxation, offers a comprehensive service that includes:
- Review of previously filed returns
- Filing of corrections with the Tax Administration
- Legal representation in case of information requests
