National Court ruling: deduction of rental expenses in Spain for non-EU owners.

Property owners in Spain who reside outside the European Union (EU) and the European Economic Area (EEA) have suffered unfavorable tax treatment for years compared to EU residents. A recent ruling by the National Court could open the door to an important change.

Until now, non-resident non-EU nationals who rent out their property in Spain pay 24% on gross income, with no possibility of deducting common expenses such as insurance, cleaning, taxes or maintenance.

In contrast, residents in the EU and EEA are taxed at 19% and can deduct a series of expenses related to the rental, thus determining their tax base on net income.

In July 2025, the National Court declared that this difference was illegal and contrary to EU law.

What has the court decided?

On July 28, 2025, the National Court issued a landmark ruling (3630/2025) recognizing the right of non-resident non-EU taxpayers to deduct expenses directly related to the rental of their properties in Spain.

The court, referring to different rulings of the Court of Justice of the European Union (CJEU), indicates that it would be contrary to Union law and Article 63 of the Treaty on the Functioning of the European Union (principle of free movement of capital) to limit the possibility of deducting expenses necessary to obtain rental income only to residents of the European Union or the European Economic Area, without extending this right to non-residents from third countries.

The ruling is based on the consolidated case law of the CJEU that has extended the effects of EU freedoms, especially the free movement of capital, to residents in third countries.

What expenses could be deductible?

If the ruling becomes consolidated, non-resident property owners outside the EU could deduct:

• Cleaning and maintenance
• Utilities (electricity, water, gas)
• Local taxes such as IBI and community fees
• Repairs
• Insurance
• Agency or management fees
• Property depreciation

These expenses must be directly related to the income obtained from the rental in Spain and have a direct economic link with the rental activity.

What is the current situation?

Important: The State Attorney's Office has appealed the decision to the Supreme Court.

As of October 2025:

• Form 210 does not allow expenses to be included when tax residence is outside the EU.
• The Tax Agency maintains its current criteria until there is a final ruling.
• Assessments will continue to be calculated on gross income at 24%.

What to do now?

1. Keep all documentation

Preserve all receipts for your rental expenses from the last 4 years and future tax years.

2. Consider filing a preventive claim

Since the ruling is not yet final and the process may take several more months or even more than 1 year, the declarations from late 2021 and those from 2022 are about to expire (4 years). To avoid losing the right to claim if the Supreme Court confirms the ruling, we recommend filing a precautionary rectification request that allows you to interrupt the statute of limitations and preserve your right to obtain a refund in the future. Without this action, when the final ruling arrives, you will have permanently lost the right to claim for the oldest tax years.

3. Stay informed

Stay informed with our updates on the blog and social media (Instagram, Facebook and LinkedIn).

4. Consult with professionals

From IberianTax we can help you:

• Evaluate your particular situation
• Prepare and submit a precautionary rectification request
• Manage the entire administrative process

Looking to the future

In IberianTax we value this ruling as a positive step towards fairer taxation for non-resident property owners outside the EU.

If the Supreme Court confirms this criterion, we will be facing an important change that:

• Will equalize the tax treatment of all non-residents, regardless of their country of origin
• Will allow taxation on actual net income, not on gross income
• Could open the door to refund claims for the last 4 years
• Will make real estate investment in Spain more attractive for non-EU investors

We will remain attentive to any developments and will inform you immediately. And if you need peace of mind in managing your Form 210, our team is here to help.