Spain keeps tax break fight alive for non-resident landlords

Spain’s National Court ruled on July 28, 2025, that some non-EU non-resident landlords can deduct rental costs from property income instead of paying tax on gross receipts. The court said the old rule was discriminatory under EU free movement of capital principles.

The ruling matters most for owners who rent out Spanish property and pay expenses like mortgage interest, IBI property tax, insurance, repairs, management fees and depreciation. EU and EEA residents already deduct expenses before paying 19% tax. Non-EU owners have faced 24% tax on net income under the ruling, though the tax agency still hasn't changed its instructions.

Who stands to benefit

The case began with a U.S. taxpayer and Barcelona rental income, but the logic could reach other non-EU owners from the U.K., Canada and Australia. The key test is whether the expense is directly tied to the rental activity and backed by paperwork.

Tourists and short-term visitors aren't affected unless they own Spanish rental property. For nomads, the issue only matters if they hold income-producing real estate in Spain.

What landlords need to file

Landlords should keep filing Modelo 210 for non-resident income tax. The return is due quarterly, within 20 days after each quarter or annually by Jan. 20 for the prior year.

Taxpayers can try citing the court ruling in claims or filings, but the Spanish Tax Agency is still enforcing the old gross-tax approach while it appeals to the Supreme Court. If the high court upholds the decision, refunds could cover the last four non-prescribed years.

Read our full Spain guide for the complete picture and check nomad news for more updates.