New Court Ruling in Spain: Rental Expenses Can Be Deducted Even for Non-EU Non-Residents

A recent judgment from the Audiencia Nacional (July 28, 2025) reshapes the tax landscape for property owners residing outside the EU. The court ruled that these owners may deduct rental-related expenses when filing the Spanish Non-Resident Income Tax (IRNR), aligning their treatment with EU/EEA residents and correcting a significant asymmetry.

Background to the Ruling

Until now, the right to deduct expenses applied only to EU/EEA residents. This decision overturns the previous stance of the Central Economic-Administrative Court and relies on the principle of free movement of capital (Article 63 of the TFEU).

The case originated from a U.S.-based property owner with a rented apartment in Barcelona, but the ruling has broader implications for all non-EU non-resident property owners.

Immediate Consequences

• Possibility to amend previous IRNR filings to include rental expenses.
• Refund claims may be filed where statutes of limitation allow.
• Eligible expenses include maintenance, community fees, insurance, and property management, among others.

What Remains Unchanged

• The general IRNR tax rate for non-EU non-residents stays at 24%, compared to 19% for EU/EEA residents.
• The special IRPF reduction for long-term residential leases does not apply to IRNR.

Tax and Market Impact

The ruling may result in refunds and lower effective tax costs for non-EU landlords. At the same time, it strengthens legal certainty and puts pressure on lawmakers to ensure Spanish tax rules are consistent with EU law.

Effects on the Rental Market

A more neutral framework, regardless of the owner’s residency, can level the playing field for investment decisions and may influence the supply of rental housing—particularly in regions with a high share of foreign-owned properties.

A Signal to Housing Policy

The ruling comes amid political debate over extraordinary taxes on property purchases by non-EU buyers, with proposals of up to 100% surcharges. While the court did not address that issue, the decision sends a clear warning about the scrutiny of measures that discriminate by residence or nationality, given potential conflicts with EU freedoms.

At Estity, we see this ruling as a positive step toward clarity and fairness. For property owners, it opens up new opportunities to optimize rentals and strengthen the value of their investments.