My Lawyer In Spain
- Oct 1
- 2 min read
Spanish Court Rules: Non-EU Property Owners Can Deduct Rental Costs in Spain
The Spanish National Court has issued a landmark ruling allowing non-European property owners to deduct rental expenses, a benefit previously reserved only for EU residents. The Court also declared Spain’s prior tax treatment discriminatory, marking an important step toward fairer rules for international property owners.
What has changed?Until now, non-EU residents renting Spanish property could not deduct costs such as cleaning, utilities, or marketing from their rental income, while EU residents could. Non EU are also taxed at a higher flat rate of 24% compared with 19% for EU citizens, a rate gap that still remains.
The case that triggered the decision involved a U.S. citizen who owned property in Barcelona. Spain’s tax authority had argued that deductions were unavailable to non-EU residents, forcing them to declare gross rental income. The National Court rejected this, finding it incompatible with EU law, particularly Article 63 of the Treaty on the Functioning of the European Union, which protects free movement of capital.
Why the ruling mattersThe Court stressed that Spain cannot justify harsher tax treatment for non-EU residents. Just as discriminatory rules on inheritance and donations tax were struck down by the European Court of Justice and Spain’s Supreme Court, the same principle applies to rental income. Equal treatment is the standard, regardless of nationality or residence.
This judgment overturns the stance of Spain’s Central Economic-Administrative Tribunal (TEAC) and opens the way for non-EU owners to claim deductions in the same way as EU residents.
Implications for future tax measuresThe ruling also has political significance. Spain’s President, Pedro Sánchez, recently proposed a new “Complementary State Tax” of 100% on property purchases by non-EU residents. The Court’s decision strongly suggests such a measure would breach EU law, amount to discrimination and likely be struck down in both Spanish and European courts.
A move toward fairnessFor non-resident owners and potential investors, this ruling provides greater certainty and reassurance. It confirms that Spain must respect principles of fairness and non-discrimination, offering a more level playing field for those investing in Spanish real estate.
At My Lawyer in Spain, we see this as an important step forward for equality and legal clarity. If you are a non-resident who owns or plans to purchase property in Spain, our team can guide you through the legal and tax implications to ensure you are protected.
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