Can you deduct rental expenses if you live outside the EU? What the courts have ruled and what is still open

If you rent out a property in Spain and live outside the European Union — the United Kingdom, the United States, Switzerland, Canada, Latin America — you are taxed at 24% on your gross income, with no deduction of expenses. Two Spanish National Court judgments have allowed the deduction of expenses in one particular case, but the question is not settled.

What the law says today for non-EU resident owners

Spanish non-resident income tax (IRNR) legislation allows residents of the European Union, Iceland, Norway and Liechtenstein to deduct the necessary expenses of a rental. Those taxpayers are taxed at 19% on the net rental result.

Residents of any other country — the United Kingdom, the United States, Switzerland, Canada or Latin America — are taxed at 24% on gross income, with no deductions. That remains the Spanish Tax Agency's standard position and it is what applies today when you file Form 210.

What the courts have ruled

The Spanish National Court (Audiencia Nacional) has issued two judgments, in July 2025 and March 2026, allowing a taxpayer resident in the United States to deduct expenses. The reasoning rests on the free movement of capital under Article 63 of the Treaty on the Functioning of the European Union which, unlike the other freedoms, also protects residents of third countries.

One point is worth making clearly, because it is often reported wrongly: these are not two independent precedents. They are two decisions on different tax years of one and the same dispute.

What has not happened yet

The law has not changed. The Spanish Tax Agency maintains its position. And there is no published Supreme Court doctrine settling the question.

Until that happens, a rectification request may be refused and the outcome cannot be guaranteed. Anyone promising you a refund on this basis is promising something nobody can currently assure.

What this means depending on where you live

The free movement of capital does protect non-EU residents, but applying it in practice depends on Spain being able to verify what is declared. That is why the starting position is stronger where there is a double taxation treaty with Spain and effective exchange of information — which is the case for the United States, the United Kingdom, Switzerland and Canada.

Norway, Iceland and Liechtenstein are not part of this debate: they are in the EEA and deduct expenses through the ordinary route.

Where there is no treaty and no effective exchange of information, the tax authorities have a further argument for refusing the deduction and the path is considerably more doubtful. In no case does your country of residence guarantee the outcome: it only determines how strong the starting position is.

What you can do now

There are two separate decisions here, and it is worth keeping them apart.

The returns you still have to file. The prudent course is to file them in line with the position currently in force, that is, at 24% on gross income. Filing for less than that on the strength of these judgments exposes you to an assessment with a surcharge or a penalty.

The Form 210s you have already filed. These are looked at separately, through a request for rectification of a self-assessment. Each self-assessment has its own limitation date — four years from the end of its filing period — and needs a separate request. You do not claim everything at once: you look at the calendar first, check which years are still open and which expire soonest, and then decide in what order it makes sense to move.

The Tax Agency will most likely refuse the request in line with its own position, and the matter may have to continue before the economic-administrative tribunals. It is a long route with no guaranteed outcome, which is precisely why the decision should be taken with the calendar in front of you.

What is needed in any event

• There must be an actual rental. This does not apply to periods when the property is empty or at your own disposal (imputed income).
• Expenses directly related to the rental: property tax (IBI), community fees, utilities, insurance, loan interest, repairs and depreciation.
• Valid invoices and proof of payment, and the Form 210s filed at the time.