🏛️ Landmark 2025 Tax Ruling: Relief for Non-EU Property Owners in Spain

In a groundbreaking decision, Spain’s National Court has ruled that the long-standing tax discrimination against non-EU property owners violates EU law. This 2025 ruling marks a major shift in how rental income is taxed for thousands of international investors.

⚖️ What Was the Issue?

Until mid-2025, Spain’s Non-Resident Income Tax (IRNR) regime allowed EU and EEA residents to deduct property-related expenses—such as repairs, insurance, community fees, and depreciation—before calculating their rental income tax. In contrast, non-EU residents were taxed at a flat rate of 24% on gross income, with no deductions allowed, even if they owned and rented property in Spain.

This unequal treatment was challenged and ultimately overturned by the Spanish National Court, which found the policy violated the principle of non-discrimination under EU law.

✅ What Has Changed?

As of July 2025, non-EU property owners can now:

• Deduct rental expenses just like EU/EEA residents.
• Report net rental income instead of gross, reducing their tax liability.
• Claim refunds for overpaid taxes from previous years—provided their country’s Double Taxation Agreement (DTA) with Spain includes a non-discrimination clause.

📌 Who Is Affected?

This ruling benefits non-EU owners from countries like the United Kingdom, United States, Canada, Australia, and others with qualifying DTAs. It applies to both short-term holiday rentals and long-term tenancies.

📝 How to Claim a Refund

If you’ve paid tax on gross rental income in recent years, you may be eligible for a refund. Here’s what to do:

1. Review your past Modelo 210 filings.
2. Consult a tax advisor to confirm your country’s DTA includes a non-discrimination clause.
3. Submit a refund claim within the statute of limitations—typically four years from the date of payment.

💡 Why This Matters

This ruling not only corrects a legal imbalance but also makes Spain a more attractive destination for global property investment. It’s a win for fairness, transparency, and international cooperation.

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