Owning rental property in Spain can be profitable, but until recently non-EU/EEA landlords were barred from deducting any expenses on their tax returns. A landmark Audiencia Nacional ruling on July 28, 2025 has changed that—now all non-resident property owners can offset directly related costs against their Spanish rental income. Read on to learn how this affects you and what steps to take next.
Taxation Regimes for Rental Income
| Tax Status | Tax Regime | Expense Deductibility |
|---|---|---|
| Spanish tax residents | IRPF (Personal Income Tax) | Yes, full range of necessary expenses |
| EU & EEA residents without permanent establishment | IRNR (Non-Resident Income Tax) | Yes, since the 2010/2014 amendments |
| Third-country non-residents (e.g. US, UK post-Brexit) | IRNR | No, under statutory wording until the July 28 2025 Audiencia Nacional ruling |
Spanish Tax Residents (IRPF)
Spanish fiscal residents report rental income on Form 100 under the IRPF. They may deduct the necessary expenses, which include:
- Interest and other financing costs on borrowed capital used for acquisition or improvement of the property
- Costs of maintaining and repairing the asset, such as:
- Routine painting, plastering or facility repairs
- Replacement of elements like heating systems, lifts or security doors
- Non-state taxes and surcharges (property tax, rubbish collection, lighting), excluding penalties
- Insurance contract premiums
- Legal defence expenses
- Amounts allocated to depreciation, provided they match actual depreciation
All costs must be properly documented—keep invoices, bank transfers and contracts to prove the direct link to your rental activity.
EU & EEA Residents under IRNR
Since the 2010 and 2014 amendments to the IRNR (RDL 5/2004), non-resident landlords in another EU/EEA state with effective tax-information exchange can deduct the same expenses as Spanish residents. Article 24.6 of the IRNR grants:
- Deductibility of expenses listed in the IRPF rules
- Provided they relate directly and indivisibly to the Spanish rental activity
This carve-out closed the gap for intra-EU/EEA landlords—but left third-country owners without relief, until now.
Third-Country Non-Residents (e.g. US Citizens, UK after Brexit)
Article 24.1 of the IRNR originally taxed non-resident rental income “on its gross amount,” disallowing any deduction for third-country landlords. That meant:
- Total rent received formed the taxable base
- No offset of any expense
The Audiencia Nacional decision SAN 3630/2025 (ECLI:ES:AN:2025:3630) has overturned this rule, extending expense-deduction rights to all non-residents.
How the Audiencia Nacional Ruling Changes the Landscape
In SAN 3630/2025, a US resident challenged the TEAC’s refusal to allow deductions. The Audiencia Nacional held that:
- Article 63 TFEU’s free movement of capital applies to third-country residents
- Spain’s exclusion of non-EU/EEA nationals conflicted with EU treaty freedoms and the Spain-US Double Taxation Treaty’s non-discrimination clause
Consequently, non-EU/EEA landlords can now deduct all directly related expenses on Model 210. This judgment aligns Spain’s practice with broader EU principles and ensures parity for every non-resident owner.
Practical Steps for Non-EU/EEA Landlords to Claim Rental Expense Deductions
- Gather Documentation of All Expenses Directly Linked to Your Rental Activity
- Invoices for repairs, insurance, management fees, mortgage interest
- Bank statements and contracts tying each expense to your Spanish property
- Major expense: property depreciation
- Amounts allocated to depreciation, provided that they correspond to effective depreciation
- Depreciation is considered effective when it does not exceed 3 % of the higher of:
- The acquisition cost paid
- The cadastral value (excluding the value of the land)
2. Review Past IRNR Filings (Up to 4 Years Back)
- Identify returns where you paid tax on gross rent
- Prepare rectification requests citing SAN 3630/2025
- Offset expenses proportionally to the time the property was let during the calendar year
- For example, if rented for half the year, you can deduct 50 % of the home insurance premium
3. File or Amend Model 210
- Detail each deductible expense in the corresponding sections
- Attach proof of payment and a cover letter explaining the recent ruling
4. Seek Professional Guidance
- Tax rules can be complex—especially post-ruling
- Contact a Spanish tax attorney for a personalized strategy and audit support
Conclusion
The Audiencia Nacional’s July 2025 decision empowers every non-resident landlord—regardless of domicile—to claim expense deductions once restricted to EU/EEA nationals. By documenting costs meticulously and amending past returns, you can significantly reduce your IRNR liability and optimize your Spanish rental income.