Before 20 January 2026, all non-residents in Spain must file a Non-Resident Income Tax return (form 210) for each property rented out in Spanish territory:

• Non-resident EU or EEA taxpayers are taxed at 19% on the net income (i.e., they may deduct from the rental income all expenses related to said rental: depreciation, property tax, repairs, community charges, interest, home insurance, etc., although they cannot apply the 50% reduction available to Spanish tax residents when the rental is used as permanent housing).

• Non-residents from non-EU countries, however, are still required to pay 24% on the gross rental income (i.e., without deducting any expenses related to the rental) and cannot apply the 50% reduction available to Spanish tax residents for rentals used as permanent housing.

As we have previously highlighted in earlier articles, this results in HUGE differences in taxation between EU and non-EU owners. There are also significant differences between non-resident landlords and Spanish tax-resident individuals, who may deduct expenses and apply a 50% reduction to their net rental income (for permanent housing rentals) before applying the progressive Personal Income Tax scale.

In our view, it is reasonable for non-EU taxpayers to disregard or simply not apply the current Non-Resident Income Tax rules and instead declare tax as EU taxpayers do, on the net rental income at 19%.

This position is even more justified in light of the important judgment of the Spanish National Court (Audiencia Nacional) issued on 28 July 2025, which we discussed in our post https://www.consultingdms.com/importante-sentencia-de-la-audiencia-nacional-de-28-7-2025-que-rechaza-la-discriminacion-de-extracomunitarios-que-alquilan-inmuebles-en-espana-permitiendoles-deducir-gastos/
. The ruling concludes that all non-resident taxpayers are entitled to deduct expenses when determining the taxable rental income for NRIT purposes, not only EU and EEA residents—otherwise, the rule constitutes a restriction on the free movement of capital.

To do this, it is necessary to “trick” the Spanish Tax Agency’s online system when completing form 210, because selecting a non-EU country of residence automatically leads the program to require gross income only, disallows the entry of expenses, and applies the 24% rate. Therefore, the taxpayer must directly enter the net income (after deducting all verifiable expenses).

Of course, non-EU taxpayers choosing this approach must be aware that the Tax Authorities may review their returns and consider that such non-application of the current statutory rule constitutes a breach, requiring payment of the difference up to 24% of the gross income, plus a potential penalty of around 50% and late-payment interest.

However, we consider the likelihood of the Tax Authorities imposing a penalty that could withstand challenge to be very low, given the aforementioned High National Court judgment of 28 July 2025.

In any case, the arguments to contest such an assessment and any possible penalty are numerous and robust, as already explained in our post https://www.consultingdms.com/no-residentes-extracomunitarios-que-alquilan-inmuebles-en-espana-pueden-inaplicar-la-ley-que-les-discrimina/. These arguments are further strengthened not only by the National Court judgment but also by the recent rulings of the Spanish Supreme Court of 29 October 2025 (appeal 4701/2023) and 3 November 2025 (appeal 7626/2023), which, based on EU law and the prohibition of restricting the free movement of capital, declare inapplicable the Wealth Tax rule that discriminates against non-residents by denying them the joint PIT-Wealth Tax limit.

Although we are aware that the National Court’s judgment has been appealed by the State Attorney’s Office to the Supreme Court, we remain very optimistic—especially following the Supreme Court’s recent rulings regarding discrimination against non-residents under the Wealth Tax.

In any event, it is undeniable that the position of an EU or EEA resident who rents out property located in Spain is not merely comparable but absolutely identical to that of a resident of a third country carrying out the same activity. There is no justification for such radically different tax treatment.

Consequently, assuming the risk of having to engage in a long and demanding legal battle against the Tax Authority (bearing in mind that the power to disapply national rules that conflict with EU law lies with the courts and the Administration itself—but NOT with the private individuals affected), we believe it is not unreasonable for non-EU taxpayers to complete their 2025 NRIT return (form 210) by declaring net income taxable at 24%.

In any case, we are awaiting a new judgment from the High National Court in one of our cases, where the court will not only address the possibility of deducting rental-related expenses but also rule on whether the 19% rate and the 50% reduction (60% until 2023) applicable to rentals used as permanent housing by the tenant can be applied.

Notwithstanding all of the above, more cautious taxpayers may choose to continue filing form 210 using the 24% rate on gross income, and later request a rectification of those self-assessments before the statute of limitations expires (https://www.consultingdms.com/no-residentes-con-inmuebles-alquilados-en-espana-es-momento-de-solicitar-la-devolucion-de-ingresos-indebidos/), providing evidence of deductible expenses and requesting taxation on the net income at the current 19% rate, based on EU law and the recent National Court judgment. The Tax Authority will undoubtedly reject such requests, and legal proceedings will then need to be initiated—without any risk of penalties, and with the possibility of obtaining refunds plus late-payment interest accrued from the date of each payment (formerly 3.75% and currently 4.025% annually), supported by the strong arguments mentioned above.

We remain at the disposal of anyone who may have any questions when completing the 2025 Form 210 (IRNR). You may contact us at the following email address: adelcampoj@dmslegal.org

In Palma de Mallorca, December 4th 2025.

Alejandro del Campo Jimenez, solicitor and tax advisor.