ATTENTION NON RESIDENT LANDLORDS

On July 28, 2025, Spain’s Audiencia Nacional (National Court) delivered a landmark ruling confirming that it is discriminatory and contrary to EU law to prohibit non-EU, non-resident property owners from deducting rental-related expenses on their Spanish rental income  .

What Does This Mean for U.S. Citizens (and Other Non-EU Non-Residents) Renting Out Spanish Property?

1.

You Can Now Deduct Rental Expenses

Non-EU non-resident landlords — including U.S. citizens — are now entitled to the same allowable deductions as EU/EEA residents. This includes expenses such as:

• Mortgage interest

• Property taxes (e.g., IBI)

• Insurance premiums

• Repairs and maintenance

• Utilities

• Property management or agency fees

  
  

2.

Tax Is Based on Net Rental Income

Previously, non-EU residents were taxed at 24% on the gross rental income, with no deductions allowed  . With the new ruling, taxation should now be applied to net rental income, significantly reducing your taxable base  .

3.

Potential for Retroactive Tax Refunds

You may be able to file amended Modelo 210 returns for prior years to recover overpaid taxes — a potentially significant refund. The ruling creates a strong basis for requesting such rectifications  .

4.

Supreme Court Appeal Possible

While this decision currently stands and can already be applied, it’s not yet final — the ruling could be appealed to Spain’s Supreme Court  . Still, the current ruling is grounded in robust EU treaty law, particularly Article 63 of the TFEU (free movement of capital)  .

Next Steps You Should Consider

1. Fall within the rules: Ensure you’re filing using Modelo 210, declaring net income with documented expenses.

2. Gather documentation: Collect invoices, receipts, loan statements, and official proofs of expenses for your property.

3. Review past filings: Consult a tax professional to see if you’re eligible to amend previous years’ returns for refunds.

4. Stay updated: Monitor any appeals—for example, future decisions by the Supreme Court.

5. Align documentation immediately: Begin current and future filings based on net taxable income to avoid overpaying.

Bottom Line

This ruling is a major victory for fairness and equal treatment under EU law. As a U.S. (non-EU) property owner renting in Spain, you now enjoy important tax benefits that were previously reserved only for EU residents.