NON-RESIDENT property owners in Spain have been handed a major victory after the National Court struck down a tax rule that discriminated against non-EU landlords.
In a ruling on July 28, 2025, the court declared it unlawful to deny non-EU, non-residents the right to deduct rental expenses on Spanish properties, bringing their treatment into line with EU citizens.
The decision means non-EU owners – including Brits, Americans and Latin Americans – can now subtract costs such as repairs, mortgage interest and insurance before being taxed.
In practice, they will now pay tax on their net rental income rather than on the full amount, according to Tim Negru, a Mediterranean property expert for foreigners and founder of AffordiHome.
Even more significantly, the ruling allows property owners to claim back four years of overpaid tax, potentially saving thousands of euros.
Until now, the system treated EU and non-EU residents very differently. EU and EEA owners were able to deduct expenses and were charged at a 19% rate, while non-EU owners faced a flat 24% levy on gross rental income with no deductions.
The National Court’s decision follows EU law under Article 63 of the Treaty on the Functioning of the European Union, which prohibits restrictions on the movement of capital.
Spain’s Supreme Court is now expected to consider whether non-EU landlords should also benefit from the lower 19% tax rate and the 50–60% rental income reduction already granted to residents.
The ruling could also undermine the government’s controversial proposal, unveiled by Prime Minister Pedro Sánchez in January, for a 100% housing tax on non-EU buyers.
READ MORE: Property boom continues in Spain with highest half-yearly sales figures since 2007
Critics warned such a move would deter investment and hit markets with strong British and American ownership, especially along the costas.
Observers say the judgment may set a precedent across Europe, particularly in countries such as Italy, where rules for non-resident owners vary and may face similar challenges.
Click here to read more Property News from The Olive Press.
