A recent ruling by Spain’s National High Court may mark a turning point in how non-EU tax residents are treated under Spanish rental income tax law. Until now, non-EU landlords who earn income from Spanish rental properties have been required to pay 24% tax on their gross rental income, with no right to deduct expenses — a tax treatment that differs significantly from that applied to EU and EEA residents.
At Manzanares Lawyers, we believe it is essential for non-resident clients to stay informed about this potential change, which could open the door to important tax relief — and possibly, refund claims for recent tax years.
What the Court Has Ruled
In its judgment of 28 July 2025, the Spanish National High Court (Audiencia Nacional) ruled in favour of a non-EU taxpayer who had received rental income from property located in Spain. The Court held that such taxpayers should be entitled to deduct necessary rental-related expenses, in the same way as EU and EEA residents.
This means that if the ruling becomes final:
- Non-EU taxpayers may deduct expenses directly linked to rental activity, such as repairs, mortgage interest, insurance, and other related costs.
- The applicable tax would be based on net income (income minus deductible expenses), instead of gross rent.
- There may be a possibility to claim refunds for overpaid taxes during the last four non-prescribed tax years.
What This Means for Non-EU Property Owners
If this interpretation is confirmed by the Spanish Supreme Court and formally adopted by the national tax authorities, it would correct a long-standing disparity in how non-resident taxpayers are treated under Spanish law.
Currently:
- EU/EEA residents are allowed to deduct expenses and are taxed on net income.
- Non-EU residents are taxed at 24% on gross rental income, without any deductions.
This ruling, if upheld, would eliminate that differential treatment — bringing Spain’s tax rules in line with the principle of equal treatment and helping reduce the tax burden on many international landlords.
Is the Law Changing Yet?
It is important to emphasise that this ruling does not yet change the law. As of now:
- The current rule remains in place: 24% tax on gross rental income for non-EU tax residents.
- The ruling can still be appealed before the Spanish Supreme Court.
- A change in application will only occur if the Supreme Court confirms the ruling and the Spanish Government adapts the legislation accordingly.
Until then, non-EU owners must continue to declare and pay tax on gross rental income, following the criteria currently enforced by the Spanish tax authorities.
Could Refunds Be Claimed Later?
If the Supreme Court upholds this ruling and the tax authorities adopt the new interpretation, non-EU landlords may be able to:
- Claim refunds for excess tax paid in the past four years, known as the non-prescribed period.
- Recover amounts corresponding to expenses they would have been entitled to deduct had they been taxed under the same conditions as EU residents.
- This would apply to landlords who have received rental income in Spain and incurred legitimate, verifiable expenses during that time.
What Should Non-EU Landlords Do Now?
- Continue to declare gross rental income and pay the applicable 24% tax, as required by current regulations.
- Keep detailed records of rental-related expenses (invoices, mortgage interest, insurance, etc.) in case deductions or refunds become available.
- Consult your legal or tax adviser to understand how this ruling may affect your future tax filings or claims.
- Stay informed, as the situation may evolve depending on further judicial and legislative developments.
How Manzanares Lawyers Can Help
At Manzanares Lawyers, we specialise in advising non-resident property owners on tax compliance and legal strategy. Our team is closely monitoring this ruling and any developments before the Spanish Supreme Court or national tax authorities.
We can assist you with:
- Ongoing tax compliance and rental declarations
- Analysing your eligibility for potential future deductions
- Preparing refund claims if and when new regulations are confirmed
- Advising you on how best to preserve documentation now for future use
If you are a non-EU landlord with property in Spain and would like to understand how this decision may impact you, contact our team at Manzanares Lawyers. We are here to help you protect your property, your tax rights, and your long-term interests in Spain.
