Rental taxation in Spain for non-resident property owners

This report details the taxation applicable to non-resident property owners who rent out properties in Spain. It analyses the legal and fiscal differences between long-term and short-term (holiday) rentals, the taxes according to the tax residence of the owner (EU/EEA or outside the EU), the national tax regulations (non-resident income tax, VAT, deductions and obligations), regional regulations (with emphasis on Asturias and comparisons with Catalonia, Madrid, the Balearic Islands, among others), examples of tax calculations for different countries (Norway, USA, UK) and considerations regarding double taxation agreements to avoid double taxation.

1. Long-term rental vs. short-term (tourist) rental

Legal framework: The main legal difference lies in the purpose and legal regime of the rental. Long-term rental (permanent residence) is governed by the Urban Leases Act (LAU), while short-term rental for tourist purposes is usually excluded from the LAU and is regulated by the tourist regulations of each Autonomous Community.

Specifically, the LAU excludes

‘the temporary transfer of use of an entire furnished and equipped home in conditions for immediate use, marketed or promoted in tourist channels... for profit, when it is subject to a specific regime derived from its sectoral tourism regulations’.

In other words, holiday rentals (e.g. via Airbnb, Booking, etc.) are not considered to be regular home rentals, but accommodation services governed by regional tourism laws, while a long-term rental (for example, an annual contract for the tenant's permanent residence) does fall under the LAU.

Differential rights and obligations: As they are subject to different regulations, there are important distinctions: in a long-term rental of a primary residence, the tenant enjoys greater protection (minimum duration of the contract, forced extensions, etc. according to the LAU) and the owner must deposit the legal deposit with the corresponding regional body. On the other hand, in tourist rentals, the conditions are freely agreed within the framework imposed by tourist regulations (for example, quality requirements, registrations, limitations on days or capacity, etc.). In addition, many autonomous communities require registration or a licence to rent out housing for tourism and compliance with technical and service requirements.

Tax differences by type of rental: From a national tax point of view, both long-term and tourist rentals generate rental income that is taxable in Spain. However, for owners resident in Spain there is a significant tax incentive for long-term rentals intended as a primary residence: in personal income tax, a reduction of 60% is applied to the positive net yield obtained from the rental of the tenant's primary residence (Note: From 2024 this reduction may vary according to new legislative conditions, but in previous contracts it was 60% in general). This reduction does not apply to seasonal or tourist rentals or to non-resident landlords. Non-resident landlords, as they are taxed under IRNR, cannot apply this reduction and are taxed on 100% of the income (net or gross as the case may be, see section 3). In both types of rental, if the lease is limited to the mere provision of the property without additional services, the transaction is exempt from VAT (see section 3), and is considered a residential lease; whereas if services typical of the hotel industry are provided in a tourist rental (periodic cleaning during the stay, change of sheets, catering services, etc.), then fiscally it is a lodging activity subject to VAT (10%).

In short, the short duration per se does not change the application of the IRNR, but it usually implies additional requirements (tourist registration, possible VAT obligations, local tourist taxes, etc.) that do not apply in a conventional long-term lease.

2. Taxes according to the owner's country of residence (EU/EEA vs. outside the EU)

The owner's tax residence determines the tax treatment of rental income in Spain, especially in the case of Non-Resident Income Tax (IRNR). Spanish regulations distinguish between owners resident in the European Union or European Economic Area (EEA) with effective exchange of information (including Norway and Iceland, and Liechtenstein in practice) and owners resident in third countries (outside the EU/EEA). The main differences are:

Tax rate: Non-residents resident in the EU/EEA are taxed at 19% on their rental income in Spain, while non-residents from outside the EU are taxed at 24%. These rates are in force from 2016 onwards (previously in 2015 the EU rate was 19.5% and in previous years 24-25%).
Expense deduction: Owners resident in another EU or EEA state can calculate the non-resident income tax base in net terms, i.e. income minus deductible expenses related to the rental, just as a resident would do in personal income tax.

It is possible to deduct justified expenses directly linked

with the rental income, such as: maintenance and repair costs, mortgage interest on the property, local taxes (e.g. property tax, rubbish collection tax), insurance, community charges, management or advertising fees, depreciation of the property, etc., provided that the property is rented out and the expenses have a direct economic link with the income.

On the other hand, non-resident owners outside the EU/EEA cannot deduct expenses, and must be taxed on the gross income obtained. This makes a significant difference in the effective tax burden.

Below is a comparative table of IRNR taxation according to the residence of the owner:

Tax residence of the owner IRNR type Tax base Permitted deductions Calculation example EU/EEA resident(natural person) | 19% | Net income (income - related expenses) | Yes (expenses related to the rental: property tax, repairs, interest, amortisation 3% construction value, etc.) | For example, annual income €14,000, deductible expenses €8,500 → base €5,500; non-resident income tax = €5,500 × 19% = €1,045 (being EU)
Resident outside the EU/EEA | 24% | Gross income (no expenses are subtracted) | No (no deductions are allowed, except where an agreement applies) | E.g., same income €14,000 (expenses €8,500 not deducted) → base €14,000; IRNR = €14,000 × 24% = €3,360

Example: A German (EU) landlord who rents out his home in Spain for €3,000 per quarter and has €1,200 of deductible expenses in that period will pay tax in Spain at 19% on €1,800 of net income, paying €342 of IRNR.

On the other hand, a British (United Kingdom, third country) landlord with an annual rent of €14,000 and €8,500 in non-deductible expenses will pay €3,360 in IRNR, as 24% is applied to the full €14,000.

Similarly, an owner from Italy (Norway and Iceland are part of the EEA) would be treated in the same way as an EU citizen (19% on net income). An owner from the United States or any non-EU country would be taxed at 24% on gross income.

3. National tax regulations: IRNR, VAT, deductions and obligations

This section details the taxation under Spanish law of property rentals by non-residents, including the Non-Resident Income Tax (IRNR), Value Added Tax (VAT), applicable deductions and other tax obligations.

3.1 Non-Resident Income Tax (IRNR)

Rental income: Income derived from the rental of real estate located in Spain by a non-resident is always taxed in Spain through the IRNR, given that double taxation agreements attribute the tax to the State where the property is located.

In general, this income is considered income from property capital in IRNR (passive income), unless the rental constitutes an economic activity of the non-resident in Spain (see section on permanent establishment below).

When the rental does not constitute an economic activity (which is common, as the owner does not usually have a business organisation in Spain), each rental income accrued is declared as income from real estate capital. The tax base is calculated according to the owner's tax residence, as we have seen: if he is an EU/EEA resident, he can deduct authorised expenses (detailed below), and if he is a non-EU resident, he does not deduct expenses.

The tax is calculated by applying the corresponding rate of 19% or 24% to the tax base.

Each rental payment is considered accrued when it is due or received, which determines the period of the tax liability.

Obligation to file a tax return (form 210): The non-resident owner must file the IRNR tax return using Form 210. Until 2023, the usual practice was to file a quarterly return for each quarter in which income had been obtained (or even one for each month of rent, although it was allowed to be grouped quarterly if it was the same payer and property)

However, since the

accruals of 2024, the possibility of grouping the rental income for the whole year into an annual declaration (unified presentation) instead of quarterly has been introduced.

In other words, from 2024, form 210 for rentals may be submitted annually with all the income for the financial year, within the established deadlines, simplifying the formal obligations.

Withholdings: If the lessee (tenant) is a company or professional who uses the property in their activity, they are obliged to make a withholding when paying the rent to the non-resident. The withholding will be 24% in general, or 19%if the owner proves residence in the EU, Norway or Iceland.

This withholding is paid to the Treasury on account of the non-resident's IRNR. If the tenant is a

private individual, there is no withholding, so the landlord must self-assess the tax quarterly or annually on his own account. In practice, many rentals (especially of housing) are to private individuals, so the non-resident landlord submits his Model 210 forms directly, entering the corresponding amount. If there is tax withheld (e.g. if the property is rented to a company), the non-resident will still submit form 210 declaring the income and subtracting the tax withheld.

Deductible expenses (EU/EEA only): For non-resident property owners in an EU/EEA country, the deductible expensesallowed are the same as those that residents can deduct from their income tax for income from real estate capital.

These include, for example:

Local taxes and fees: Property Tax (IBI), rubbish collection tax, etc., corresponding to the rented property.
Homeowners' association fees and other maintenance expenses (cleaning, repairs, minor renovations necessary for the rental).
Home insurance linked to the rented property.
Interest on mortgage loans used to purchase or improve the rented property (for the part of the period in which it is rented).
Services and supplies paid for by the owner during the rental period (water, electricity, internet, etc., if assumed by the landlord).
Depreciation of the property: an annual percentage for depreciation of the leased property is allowed to be deducted. Personal income tax law generally sets 3% per year of the greater of the acquisition value (construction cost, not including the value of the land) or the cadastral value of the construction proportional to the rental period. This depreciation is an important deductible expense in long-term rentals.

These expenses are only subtracted if the rental is declared by an EU/EEA taxpayer and provided that they are directly related to the property and the rental activity in Spain.

Furthermore, they are only deductible in proportion to the days actually rented. Periods when the property is not rented do not generate deductible expenses at that time (but they may generate the obligation to pay tax on

imputed income, see note below). On the other hand, non-EU residents cannot apply any expenses - they are taxed on their full income.

Note: When the property remains empty or for personal use for part of the year, the non-resident owner must file an IRNR return for imputed income for those days (imputation of urban real estate income). This notional rent is typically calculated as 1.1% or 2% of the annual cadastral value prorated for the days not rented, and is also taxed at 19%/24% as appropriate
iberiantax.com. The declaration of imputed income (own use) is normally made once a year (annual form 210 per imputation).

Economic activity vs. passive leasing: It is worth mentioning that if the non-resident landlord organises their rental in Spain in such a way that it constitutes a permanent establishment, the tax treatment changes. According to the regulations, for the lease to be considered an economic activity (in personal income tax/non-resident income tax), it is generally required that the owner has at least one person employed with a full-time employment contract dedicated to the management of the rental (for example, an administrator or caretaker).

In practice, few non-residents meet this requirement. If they have a permanent establishment in Spain, non-residents would be taxed as a local entity (corporate tax rate, currently 25%, on net profits, and corresponding accounting/tax obligations)

This is not common for individual homeowners; they normally pay tax as non-residents

without a permanent establishment (for isolated income from real estate capital).

3.2 Value Added Tax (VAT) on rentals

The VAT taxation of the rental depends on the use of the rented property and the services provided:

Rental of housing for residential use (traditional urban rental of the property for the tenant to use as a permanent residence, without additional services): it is exempt from VAT under Spanish VAT law.
The transfer of the bare property for housing is not subject to VAT; instead, that operation is subject to the

Property Transfer Tax (ITP)

TPO (transmisiones onerosas) category as a lease of urban property. In most autonomous communities, the ITP for housing leases is paid by the tenant through self-assessment (with a reduced rate, sometimes around 0.5% or a fixed amount depending on the rent). In practice, many private tenants do not pay this ITP, but legally, VAT-exempt rental is subject to ITP.
Tourist rentals without hotel services (e.g. tourist apartments where only accommodation and basic household goods are provided) are also considered exempt from VAT and subject to ITP, as they are merely the transfer of the use of the property. It is irrelevant that it is for a short period of time; the key is that there are no typical hotel services. The Treasury equates this case to a property rental (even if it is for days or weeks), provided that it is limited to accommodation. Therefore, an owner who rents out their flat on Airbnb without providing extra services should not charge VAT to the tourist. (However, they must report the rental to the tax authorities using form 210 and corresponding income, as already indicated.)
Renting with hotel services: If, together with the transfer of the property, services typical of the hotel industryare offered - for example, periodic cleaning during the stay, changes of bed linen and towels, meal service, reception/concierge, organisation of activities, etc. - then the operation is not exempt from VAT. It becomes a provision of accommodation services, subject to VAT at the rate of 10% (reduced rate applicable to tourist accommodation services). In this case, the landlord (non-resident owner) should register for VAT in Spain, issue VAT invoices and submit quarterly VAT returns (form 303) and an annual summary (form 390). If the owner is a non-resident without an establishment, they may need a tax representative for VAT in Spain. In general, most small landlords avoid offering additional services so as not to complicate their tax status; they limit themselves to renting out the property (VAT exempt).

Example: If a non-resident rents out their apartment with weekly cleaning and breakfast included, they must add 10% VAT to each rental invoice. On the other hand, if they only rent out the apartment and the guest manages it themselves, they do not pay VAT (exemption for rental of housing)

Important: It has recently been clarified at a regulatory level that non-residents who own properties rented out in Spain must pay VAT where applicable. From 2023, some uncertainty was removed and it was confirmed that, if the rental is not exempt (in the case of commercial premises or accommodation with services), the non-resident is subject to Spanish VAT and there is no exemption due to their non-established status.

Therefore, they must register and pay VAT in Spain if they carry out rentals subject to VAT.

3.3 Other formal tax obligations

In addition to IRNR and, where applicable, VAT, non-resident landlords have some additional formal and tax obligations to consider:

Registration with the census: If the rental qualifies as an economic activity (e.g. tourist rental with services), the landlord should register with the Census of Entrepreneurs, Professionals and Withholders using form 036/037 before starting the activity. If you only carry out exempt rental (housing) without economic activity, it is not necessary to register as an entrepreneur for these purposes, although you do have to submit the corresponding IRNR forms 210.
Tax on Economic Activities (IAE): The leasing of real estate is taxed by the IAE (under the heading of rental of real estate). However, individuals and entities with an annual turnover of less than 1 million euros are exempt from paying IAE. In practice, a private non-resident landlord will not pay IAE unless his or her income in Spain exceeds that threshold. However, if it constitutes a business activity (many properties or with services), he or she must register for IAE even if he or she does not have to pay it afterwards.
Form 179 (tourist rental information): Platform intermediaries (such as Airbnb, HomeAway, etc.) are obliged to report tourist stays to the Tax Agency on a quarterly basis using Form 179, detailing data on owners, income, rental days, etc.
Although this declaration is submitted by the platform or intermediary, it is advisable for the owner to check thereported data. The Treasury cross-checks this information with the IRNR declarations, so it is advisable for the owner to declare their income correctly to avoid discrepancies.
Property Tax (IBI): This is a compulsory municipal tax for all owners of real estate in Spain, whether they are residents or not. Non-residents must ensure that they pay it annually to the relevant town hall. Some municipalities have established IBI surcharges for empty homes or those used for tourism (for example, a surcharge on the IBI fee if the property is used for tourist rental, to discourage this use). It is advisable to check the local regulations; in most cases the IBI is paid the same, but in certain tourist municipalities there could be a surcharge.
Municipal fees (refuse, etc.): The owner also faces fees such as the urban waste collection fee. In some municipalities, this fee may be higher for properties rented to tourists than for normal residential use. This is part of local measures to cover the higher cost of services associated with tourism.
Tourist fees or taxes: Several autonomous communities have implemented tourist taxes that affect short-term stays. For example, Catalonia has introduced the Tax on Stays in Tourist Establishments (IEET), with a rate per person per night that varies according to the type of accommodation and location (in Barcelona city the rate is higher). The Balearic Islands have introduced the Sustainable Tourism Tax (known as the ‘ecotax’) on tourist stays, also per person/day (with reductions after a certain number of days). In both cases, the person in charge of accommodation (owner or manager) must collect this amount from the tourist and then pay it to the regional tax authorities. These taxes are compulsory: ‘Regions such as Catalonia and the Balearic Islands impose taxes on tourist stays, which the owner must manage’. Asturias, for the time being, does not have a regional tourist tax.
per stay (the reformed tourism law of 2024 did not include an overnight stay tax), but it is not ruled out that it will be studied in the future. Madrid and many other regions do not apply a tourist tax either (except for some specific municipal taxes in cities that implement it in the future).

4. Regional regulation: Asturias and other prominent regions

In Spain, the regulation of holiday rentals (short-stay rentals) is the responsibility of the autonomous communities. Therefore, each region has its own regulations that establish the requirements for offering housing for tourist use, the definitions, limitations and registration processes. Below, the regulations in Asturias are reviewed in detail and key aspects are compared with other communities (Catalonia, Madrid, Balearic Islands, etc.) where holiday rental regulations are particularly relevant:

Asturias: The current regulations for tourist accommodation in the Principality of Asturias are Decree 48/2016, of 10 August, on holiday accommodation and accommodation for tourist use.

This decree distinguishes between holiday homes (single-family homes or chalets offered for tourist rental on a regular basis) and homes for tourist use (homes in apartment buildings, under a horizontal property regime, temporarily assigned to tourists).

In order to operate, the owner must present a declaration of responsibility to the Principality's tourism registry and meet minimum requirements for furniture, hygiene, and services. In 2024, Asturias reformed its Tourism Law (Law 6/2024, of 13 November) introducing stricter measures for tourist flats: now the authorisation of the community of owners (Board of Owners) is required in order to rent a property as a tourist flat, and renting by the room is prohibited, the entire property must always be rented out.

In other words, in Asturias it is only permitted to rent the whole house to tourists, not parts of it, reinforcing the control over this activity. In addition, the Asturian decree requires that tourist accommodation be offered at least in the high season (July, August, September) on a regular basis, which meant that the owner had to make it available during those months to be considered a legal holiday rental (this was to prevent accommodation being offered only in the low season or sporadically).

grupomarcal.es. Asturias has also historically not allowed an apartment in a residential building to be considered a ‘tourist dwelling’ (only single-family homes were allowed as holiday homes), although Decree 48/2016 now also regulates flats (dwellings for tourist use). In short, Asturias has relatively strict regulations: compulsory registration, requirement to rent out in full, minimum season and control by the residents' association.

Catalonia: This is one of the pioneering communities in regulating tourist apartments. In 2012 it approved Decree 159/2012, which established the initial framework, recently updated by Decree Law 3/2023, of 7 November, which reinforces the regulations. In Catalonia, in order to rent to tourists it is compulsory to obtain the licence or registration of Habitatge d'Ús Turístic (HUT) granted by the Generalitat (and in practice delegated to the town councils). Each tourist home receives a registration number (for example, HUTB-012345) which must be displayed in advertisements. The requirements include: furnished accommodation with certain amenities, 24-hour contact assistance services, maintenance, civil liability insurance, etc. The municipalities in Catalonia have the power to limit these rentals: for example, Barcelona has established a permanent moratorium on the granting of new tourist accommodation licences, even considering the elimination of thousands of illegal tourist flats.
In fact, Barcelona obtained legal backing (from the Constitutional Court) to sanction and close unauthorised tourist flats, even ordering the cessation of activity in more than 6,000 flats without a licence. Catalonia also applies the aforementioned regional tourist tax, which in 2023 sets the rate for tourist apartments at around €2.75 per person/night (plus an additional municipal surcharge in Barcelona city). In short, Catalonia has exhaustive regulations: compulsory tourist licences, quotas or bans in overcrowded cities, quality standards and active taxation (inspections, high fines for illegal rentals that can reach €60,000 or more).
Balearic Islands: The Autonomous Community of the Balearic Islands (Mallorca, Menorca, Ibiza and Formentera) has implemented perhaps the most restrictive regulations in Spain regarding holiday rentals. The Balearic Tourism Law and Decree-Law 3/2022, of 11 February (moratorium on new licences) establish that a tourist licence issued by the corresponding Island Council is essential for renting to tourists.

Each island has defined areas suitable and areas prohibited for tourist rentals: for example, in Mallorca many residential areas in the capital Palma are banned for holiday rentals, while in coastal tourist areas they are allowed with limits. In addition, the Balearic Islands imposed a moratorium that suspends the granting of new licences for several years to curb the proliferation. Existing licences are scarce, expensive (buying/selling tourist places for tens of thousands of euros has been known to happen) and subject to conditions (e.g., only rentals of single-family or semi-detached houses are allowed in most cases, with apartments in multi-family buildings being prohibited in Mallorca from 2018 onwards, with some exceptions). As in Catalonia, there is an obligation to display the tourist registration number in the offers. Offences in the Balearic Islands are also severely punished, with fines that can exceed €40,000-*€400,000 in serious cases. The Balearic Islands also charge their tourist eco-tax per person per day, which the owner/manager has to collect. In short, the Balearic Islands are seeking to limit as much as possible tourist rentals in favour of residential housing and regulated tourism in specific areas, making it one of the regions with the most demanding regulations (in fact, there is talk of an almost total ban on certain islands or areas).

Madrid

The Community of Madrid regulates tourist accommodation through Decree 79/2014, of 10 July (amended by Decree 29/2019). The Madrid model has been more permissive than that of other large regions: it requires registration as a Housing Unit for Tourist Use (VUT) with the community's Tourism Department, for which the owner must submit a responsible declaration complying with basic requirements (having a certificate of occupancy, fire extinguisher, ventilation, etc.). Unlike other autonomous communities, Madrid does allow rooms to be rented out in tourist accommodation (as long as a maximum of 5 people are sharing at any one time). There is no regional limit on days or areas; however, in 2019 the City Council of Madrid approved a Special Plan (PEH) that limits professionalised tourist rentals in the city of Madrid: If a property is rented to tourists more than 90 days a year, it is required to obtain a planning licence for tertiary use (accommodation), just like a hotel, which means that in practice many properties cannot obtain it (due to technical requirements, such as having independent access from the street). This has put a considerable brake on full-time Airbnb in the capital. In other parts of Madrid, there is no such 90-day restriction. Madrid does not apply a tourist tax and, in general, its approach has been more one of liberalising the sector with ex-post control of disturbances to neighbours. Currently, with the single state registry planned for 2025 (see note below), Madrid will adapt its system but maintain its current regional regulations.
Other notable regions: Other communities with noteworthy regulations include Comunidad Valenciana (Decree 9/2024, introduces the need to register the VT number and obtain a certificate of prior urban planning compatibility from the town hall)

Andalusia

(Decree 31/2024, which updates the 2016 regulation, requires a licence and allows room rentals with a limit on the number of places); Basque Country (Decree 101/2018, which introduced a register and empowers local councils to delimit areas; San Sebastián, for example, severely limited new tourist flats in the centre); The Canary Islands(Decree 113/2015, initially banned holiday rentals in tourist areas to protect hotels, although this was partially overturned by the courts; today it requires registration and permits depending on the island); Navarra (Regional Decree 20/2022, relatively flexible but with compulsory registration); among others.

In conclusion, the regulation of tourist rentals varies from region to region: some regions encourage or tolerate the activity with few requirements (e.g. Castilla-La Mancha, Extremadura, which only require simple communications), while others restrict it drastically (Balearic Islands, Catalonia, Basque Country).
For this reason, a non-resident owner must consult the specific regulations of the autonomous region and municipality where their property is located before using it for short-term rental, in order to comply with licences, registrations, quality requirements and possible quantitative limitations.

Note: At the state and European level, there are new developments on the way: in 2023, the EU approved a Regulation on short-term rental data and in Spain, a National Register of Tourist Accommodation (planned for 2025) was announced, which will unify the regional registers. In the future, there could be greater harmonisation, but in the meantime, what is described in each region applies.

5. Practical examples of tax calculations for landlords in different countries

Below are specific scenarios of rental taxation in Spain for different non-resident landlords, varying their country of tax residence. These examples will help to understand the application of IRNR, deductions and agreements.

Owner resident in Norway (EEA country): Norway belongs to the EEA and has an information exchange agreement with Spain, so its treatment is comparable to that of an EU resident. Example: A Norwegian rents an apartment in Asturias for €1,000 per month. His annual deductible expenses (property tax, community fees, repairs) amount to €3,000.
Gross annual income = €12,000. Calculation: income 12,000 – expenses 3,000 = €9,000 net. Non-resident income tax rate 19%. Non-resident tax liability = 9,000 × 19% = €1,710 for the whole year. This amount could be declared on a single annual Form 210. (Additionally, if the property was unrented for any month, that period accrues imputed income to be declared separately at 19%). Norway and Spain have a double taxation agreement, so Spain taxes this real estate income and Norway would grant a tax credit or exemption (see section 6).

Owner resident in the United States (non-EU country): As they are from outside the EU, they are taxed at 24% without deductions. Example: A US citizen owns a villa on the Costa del Sol that they rent out on Airbnb. Let's assume that in 2024 they obtain total rental income of €20,000. He has incurred expenses (maintenance, management) of €8,000, but cannot deduct them in IRNR. Calculation: tax base = €20,000 (gross, without subtracting expenses). IRNR rate 24%. IRNR fee = 20,000 × 24% = €4,800. You must submit form 210 and deposit €4,800. If the tenants were individuals, there were no withholdings, so you pay the total; if any rent came from an agency/company with withholding, it could be subtracted. In the USA, as a resident there, you will have to declare this €20,000 on your federal tax return, but you will be able to deduct the tax paid in Spain through the Foreign Tax Credit provided for in the USA-Spain agreement (avoiding double taxation, see section 6).

Owner resident in the UK (third country from 2021): After Brexit, the British lost their EU tax treatment. Example: A UK owner has a flat in Marbella that is rented all year round for €1,200 per month (€14,400 per year). Actual deductible expenses: €5,000 (mortgage, property tax, etc.) - not deductible because they are non-EU.
Calculation: base = €14,400; rate 24%. Non-resident income tax = €3,456 per year. (If the contract is a long-term one for a tenant to live in, the British owner cannot apply the 60% reduction that a Spanish resident would have, and must pay tax on the full amount). They will declare using form 210 annually.
In the United Kingdom, when declaring their worldwide income, they will apply the Spain-UK agreement to avoid double taxation, and may deduct the Spanish tax paid from their UK tax bill.

EU resident owners with joint ownership: If several EU persons are joint owners, each one declares their proportional part. Example: Two residents in France own 50% of a holiday home in Tenerife that generates €19,000 of income in 2024. They have €8,000 of common deductible expenses.

Total calculation: (19,000 – 8,000) = €11,000 net × 19% = €2,090

Each French owner is required to declare €1,045 (half each). On form 210, each would indicate 50% ownership. As they are both EU, they apply deductions and 19%.

These examples show how the tax burden can vary substantially: a non-EU owner pays taxes on the gross amount (effectively a higher tax burden if they have high expenses, reaching ~24% of income), while an EU owner pays on the net profit (which can result in a much lower effective rate). In addition, residents of certain countries may have additional advantages or considerations via an agreement, as detailed below.

Double taxation agreements and how to avoid double taxation

Spain has signed numerous agreements to avoid double taxation (CDI) with other countries, the aim of which is to ensure that the same income is not taxed twice in full in two jurisdictions. These agreements are international treaties that take precedence over domestic legislation in the event of a conflict and offer relief mechanisms. In the context of property rentals:

Distribution of the right to tax: In practically all the agreements (which follow the OECD Model), rental income can be taxed by the state where the property is located. This means that Spain, as the country where the property is located, retains the right to collect taxes on rents (as it does via IRNR). The owner's country of residence also has the right to tax this income (because in principle a resident is taxed on their worldwide income). To avoid double taxation, the agreement establishes that the country of residence must eliminate double taxation either by exempting that income or giving a tax credit for the tax paid abroad.

Methods for eliminating double taxation: These depend on the specific bilateral agreement:
- Many agreements with Spain (especially with OECD countries such as Norway, the UK, the USA, etc.) use the imputation credit method: the country of residence recognises the tax paid in Spain as a credit against its own tax. For example, in the case of a US citizen, the US will give credit for the €4,800 paid in Spain; if their federal tax on that income were, say, €5,000, after the credit they would only pay an additional €200 in the US, and if it were less than €4,800 they would be allowed to pay practically nothing in double taxation. In the UK it works in a similar way: foreign income is declared and the Foreign Tax Credit is subtracted up to the limit of UK tax on that income.
- Some agreements (with certain countries) may apply the exemption method: the country of residence directly exempts foreign real estate income from local taxation, recognising that it was taxed only in the country of the property. This method is less common in modern agreements, but it exists in some cases or for residents of countries with territorial systems.
- In all cases, the desired result is that the total combined does not exceed the highest tax burden. It is important to review the Spain-country of residence agreement to see the applicable method (for example, the Spain-France Agreement exempts real estate income in France for a resident of France with property in Spain, while the Spain-Germany Agreement applies a credit).
Certificates of tax residence: To benefit from the provisions of the agreement (such as the elimination of double taxation, or some reduction in withholding on other types of income), the taxpayer must be able to prove their tax residence in the other country. This is done by obtaining a certificate of tax residence issued by the tax authorities of their country of residence and, if necessary, presenting it to the Spanish Tax Agency.

Rental taxation in Spain