Introduction
Two identical apartments on Paseo Vista Alegre. Same building, same orientation, same cadastral value. One belongs to a couple from Düsseldorf. The other belongs to a family from Manchester.
Both rent their property for €12,000 a year. Both pay the same local property tax, the same community fees and the same insurance.
And yet, the Manchester family may end up paying significantly more tax in Spain.
This is not an administrative error or an unusually aggressive interpretation by the Spanish Tax Agency. It is a consequence of the way Spanish Non-Resident Income Tax — Impuesto sobre la Renta de No Residentes (IRNR) currently works following the United Kingdom’s departure from the European Union.
The Spanish Tax Agency currently distinguishes between taxpayers resident in the European Union, Iceland, Norway and Liechtenstein — who are generally subject to a 19% rate on this type of income — and other non-residents, for whom the general rate is 24%.
You can consult the official Spanish Tax Agency information on income obtained from rented property by non-residents.
This is also one of the lesser-known financial consequences of Brexit.
Thousands of headlines were written about passports, airport queues and the 90/180-day rule. Far fewer explained the annual tax consequences for British owners of property on the Spanish coast.
If you are considering moving permanently to Spain as well as owning property here, our guide to Residency in Spain After Brexit explains how residence, NIE requirements, taxation and property ownership interact.
This guide explains why British owners may be paying more, how much the difference can be and what options may exist to review tax paid in previous years.
In 2026, that last point is particularly important because of recent Spanish court decisions concerning the taxation of residents of third countries.
1. The Double Difference: A Higher Tax Rate and a Broader Tax Base
Spanish Non-Resident Income Tax legislation currently provides different treatment depending on where the property owner is tax resident.
Owners who are tax resident in the European Union or certain European Economic Area countries receive different treatment from those who are tax resident in third countries.
The basic rules are contained in Spain’s Non-Resident Income Tax Law — Ley del Impuesto sobre la Renta de No Residentes (LIRNR).
The official legislation can be consulted in the Spanish Official State Gazette — BOE.
1.1. First Difference: The Tax Rate
| Tax Residence of the Property Owner | Applicable Taxation |
|---|---|
| Spain | Spanish Personal Income Tax (IRPF), as a tax resident |
| EU, Iceland, Norway and Liechtenstein | 19% |
| United Kingdom, USA, Switzerland, Canada and other third countries | Generally 24% |
Since 1 January 2021, UK tax residents have, for these purposes, been treated as residents of a third country.
That represents a difference of five percentage points every year.
However, this is not necessarily the most economically significant difference.
1.2. Second Difference: The Taxable Base
This is where the financial impact can become considerably greater.
A property owner who is tax resident in the European Union or in certain EEA countries may be able to pay tax on the net rental income, deducting eligible expenses that are directly connected with the rental activity and properly documented.
These expenses may include, subject to the applicable legal requirements:
- Local property tax — IBI.
- Community of owners’ fees.
- Insurance.
- Certain utility expenses.
- Repairs.
- Property management costs.
- Tax depreciation.
The Spanish Tax Agency provides specific information concerning deductible expenses for rented properties owned by non-residents.
A property owner who is tax resident outside the EU/EEA is, under the current wording of Spanish Non-Resident Income Tax legislation, generally taxed on the gross rental income without deducting these expenses.
And it is precisely this difference in treatment that has recently become the subject of important litigation before the Spanish courts.
If you own rental property in Spain while remaining tax resident abroad, Antón & Asociados provides specific Tax Services in Torrevieja for residents and non-residents.
The Calculation
Consider an apartment in Torrevieja rented throughout the year for €12,000, with €4,000 of documented annual expenses that would otherwise qualify for deduction.
| Concept | German Owner | British Owner |
|---|---|---|
| Gross rental income | €12,000 | €12,000 |
| Deductible expenses in this example | −€4,000 | €0 |
| Taxable base | €8,000 | €12,000 |
| Applicable rate | 19% | 24% |
| Annual IRNR tax | €1,520 | €2,880 |
Difference: €1,360 per year.
In this example, the British owner pays approximately 89% more tax on the same property generating exactly the same rental income.
Projected over ten years — without considering rent increases, changes in expenses or changes in legislation — that difference exceeds €13,000.
For an international property investor, taxation forms an essential part of the real return on investment.
That is why purchase price, rental income, taxation and legal security should always be considered together before investing in Spain.
2. What If I Do Not Rent the Property? Do I Still Pay Tax?
Potentially, yes.
Even when a property is not rented, a non-resident owner may still be liable for Spanish Non-Resident Income Tax through what is known as imputed property income — renta inmobiliaria imputada.
This applies during the periods when the property is available for the owner’s own use.
The Spanish Tax Agency provides specific guidance on imputed income from urban property owned by non-residents.
How Is Imputed Income Calculated?
The calculation generally follows three steps.
- The cadastral value of the property is used as the starting point. This can be found on the IBI local property tax bill.
- As a general rule, 2% is applied. A rate of 1.1% may apply in the cases established by law where the cadastral value has been revised, modified or determined through the relevant collective valuation procedure within the legally established period.
- The corresponding Non-Resident Income Tax rate is then applied to the resulting imputed income: generally 19% for qualifying EU/EEA residents and 24% for other taxpayers, including UK tax residents.
Example
Property in Torrevieja with a cadastral value of €90,000, assuming the 2% percentage applies.
Taxable base:
2% × €90,000 = €1,800
German owner:
€1,800 × 19% = €342
British owner:
€1,800 × 24% = €432
If the property was rented for only part of the year, imputed income is calculated only for the days during which the property was available to the owner.
The rented days are taxed separately as rental income.
If a property has more than one owner, each owner is responsible for declaring the percentage corresponding to their share of ownership.
The Spanish Tax Agency has access to cadastral, Land Registry and tax information that may be used in tax management and inspection procedures.
For this reason, allowing several years to pass without filing Modelo 210 can ultimately create a larger problem than the original amount of tax due.
The official Modelo 210 procedure is available through the Spanish Tax Agency.
3. The Major Development in 2026: Could You Recover Part of the Tax You Have Paid?
This is one of the most important issues addressed in this article.
In its judgment of 28 July 2025, appeal 636/2021, ECLI:ES:AN:2025:3630, the Spanish National Court — Audiencia Nacional — considered the case of a US tax resident who had been refused the deduction of expenses connected with the rental of Spanish property.
The National Court considered that preventing the deduction of expenses directly related to the rental activity could infringe the free movement of capital protected by Article 63 of the Treaty on the Functioning of the European Union.
This is particularly important because Article 63 does not protect capital movements only between EU Member States.
It also extends, subject to EU law, to movements of capital between Member States and third countries.
You can consult Article 63 of the Treaty on the Functioning of the European Union through EUR-Lex.
The same Section of the National Court reiterated this approach in a further judgment dated 27 March 2026, ECLI:ES:AN:2026:1521.
This potentially opens an important legal route for taxpayers resident in third countries, including the United Kingdom after Brexit.
However, it is essential to be precise:
The issue has not yet been definitively settled.
The Spanish Supreme Court admitted cassation appeal 6741/2025 by order of 15 July 2026, ECLI:ES:TS:2026:7675A.
The Supreme Court is expected to determine whether this different tax treatment constitutes an unlawful restriction on the free movement of capital and, if so, whether the difference may nevertheless be justified under European Union law.
Therefore, there is currently significant judicial support for considering a tax claim.
However, it would be incorrect to state that every British tax resident has already acquired a definitive right to deduct these expenses.
What Can Be Done in the Meantime?
Depending on the individual circumstances, it may be worth considering an application to rectify previously filed Modelo 210 self-assessments and, where appropriate, request a refund of tax unduly paid for periods that are not time-barred.
The general limitation period is four years.
However, the starting date and expiry of that period must be calculated separately for each return and tax period.
Potential expenses that might form part of such a claim — provided they are legally deductible, directly linked to the rental and properly documented — may include:
- IBI.
- Community fees.
- Insurance.
- Certain utilities.
- Repairs.
- Management costs.
- Depreciation.
A properly submitted rectification request made before the expiry of the relevant limitation period may affect the running of the limitation period for the specific returns and tax items identified.
If the application is subsequently rejected, the appropriate administrative or judicial remedies and their respective deadlines must then be considered.
Once the ordinary right to rectify has become time-barred, those amounts cannot normally be recovered through the standard rectification procedure.
Extraordinary review procedures do exist, but they are exceptional and depend on specific legal grounds.
They do not automatically become available merely because a later court judgment is favourable.
For this reason, the decision is not simply:
“Should I claim or should I not claim?”
The correct questions are:
- Which tax years are approaching the limitation deadline?
- How much tax is actually at stake?
- Which expenses can be proved?
- What documentation is available?
- How is the Supreme Court case developing?
4. When Must You File? The New Modelo 210 Calendar
There were also important changes in 2026 concerning the filing timetable for Modelo 210.
Order HAC/623/2026 of 12 June, published in the Spanish Official State Gazette on 23 June 2026, amended Modelo 210 and the filing periods applicable to certain types of property income.
The official text can be consulted in the Spanish Official State Gazette — BOE.
The Spanish Tax Agency has also published guidance explaining the new filing periods for Modelo 210.
Rental Income Resulting in Tax Payable
As a general rule, grouped rental income resulting in tax payable must now be declared between 1 and 20 April of the year following the year in which the income arose.
Where payment is made by direct debit, the deadline is 15 April.
Transitional Rules for 2026
Rental income grouped for the whole of 2026 will generally be declared between 1 and 20 April 2027.
For separate declarations, certain income arising during the first quarters of 2026 remains temporarily subject to the previous filing timetable.
Income arising during the fourth quarter of 2026 is already subject to the new filing period.
Imputed Property Income
Imputed property income corresponding to 2026 may be filed between 1 April and 31 December 2027.
Where direct debit is used, the deadline is 23 December.
Sale of a Property
Capital gains arising from the sale of Spanish property remain subject to their own specific filing timetable.
The non-resident seller files Modelo 210 after taking into account the period available to the purchaser to pay the mandatory withholding through Modelo 211.
It is also important to distinguish between voluntarily correcting a late tax return and regularisation after receiving a formal notice from the Spanish Tax Agency.
Where a taxpayer voluntarily regularises their position before receiving a prior notice, the rules on late-filing surcharges will generally apply.
Where the Tax Agency has already initiated proceedings, the taxpayer may be liable for the unpaid tax, interest and, where the statutory requirements are satisfied, potentially a penalty.
Penalties are not automatic and must be considered in light of the circumstances of each individual case.
5. The Other Critical Moment: When You Sell
The sale of Spanish property concentrates several tax obligations into a single transaction.
It should therefore be planned before completion rather than dealt with afterwards.
The 3% Withholding
When the seller is a non-resident, the purchaser must generally withhold 3% of the purchase price and pay that amount to the Spanish Tax Agency using Modelo 211.
This is not an additional tax.
It is a payment on account of the seller’s final Spanish tax liability.
If the final tax due is lower than the amount withheld, the seller must file Modelo 210 and may request repayment of the excess.
Capital Gains Tax
The capital gain arising from the sale is taxed at 19% under the IRNR, including where the seller is a UK tax resident.
Main Residence Reinvestment Relief
Spanish tax residents may qualify for main residence reinvestment relief under Spanish Personal Income Tax rules where all legal requirements are met.
The IRNR contains a specific form of relief for tax residents of qualifying EU and EEA countries.
A UK tax resident who is not tax resident in Spain falls outside that general scope following Brexit.
Property Owners Over the Age of 65
The exemption applying to the sale of a habitual residence by people over the age of 65 is contained in Spanish Personal Income Tax legislation for Spanish tax residents.
It should not automatically be assumed that the same treatment applies to a British non-resident selling Spanish property.
Municipal Capital Gains Tax — Plusvalía Municipal
Municipal capital gains tax applies to the increase in value of urban land under the conditions established by law.
Different methods may currently be used to determine the taxable base and, where the statutory requirements are satisfied, the more favourable method may apply.
Where it can be demonstrated that there has been no increase in the value of the land, the tax should not be due.
Another common problem arises when a non-resident seller discovers, while preparing the sale, that they have outstanding Modelo 210 returns from previous years.
Reviewing the tax position before placing the property on the market makes it much easier to regularise the situation in an orderly manner.
If you are still at the purchasing stage, our article Do You Need a Lawyer to Buy Property in Torrevieja? explains the Land Registry, tax and planning checks that should normally be carried out before committing substantial funds.
You may also find our guide Buying Property in Torrevieja: Legal Steps Every Foreigner Must Know useful.
6. Why These Issues Should Be Reviewed With a Lawyer
Filing a Modelo 210 can be an administrative tax procedure.
Deciding whether to claim a refund, challenge a decision, rectify previous returns or change a wider tax strategy requires a different level of analysis.
When Should You Make a Claim?
Several factors should be considered together:
- Limitation periods.
- The amount of money involved.
- Available supporting documentation.
- Expenses that can be substantiated.
- Existing case law.
- The progress of the Supreme Court proceedings.
When Should You Appeal?
An administrative decision that exhausts the economic-administrative route may be subject to judicial review before the Spanish administrative courts.
The applicable deadline and strategy should always be determined from the specific decision received.
Which Case Law May Be Relevant?
Spanish Supreme Court judgments 1372/2025 of 29 October, ECLI:ES:TS:2025:4849, and 1402/2025 of 3 November, ECLI:ES:TS:2025:4846, considered differences in the tax treatment of non-resident taxpayers in the context of Spanish Wealth Tax.
These decisions may provide useful context regarding differential treatment based on tax residence and the free movement of capital.
However, they do not directly resolve the current dispute concerning deductible expenses under Spanish Non-Resident Income Tax.
That distinction is important.
Planning an Inheritance
Where an inheritance includes property located in the Valencian Community, the applicable regional rules and the competent tax authority must be determined according to the connection rules governing Spanish Inheritance and Gift Tax.
In cases involving non-residents, Spanish state administration and Valencian regional legislation may interact depending on the circumstances.
For foreign owners of Spanish property, our guide to Inheritance Law in Spain for Foreign Property Owners can provide useful additional information.
When Can Tax Residence Change?
Spending more than 183 days during the calendar year in Spain is one of the criteria that may result in Spanish tax residence.
But it is not the only criterion.
The location of a person’s main centre or base of economic activities and interests may also be relevant.
Where two countries may both regard the same person as tax resident, the tie-breaker rules contained in the applicable double taxation treaty must be analysed.
If you are a British property owner considering a permanent move to Spain, this issue should ideally be reviewed before changing residence rather than afterwards.
7. What About the 100% Property Tax That Has Been Discussed?
This issue deserves clarification because it has generated significant concern among non-EU buyers.
In January 2025, the Spanish Government announced its intention to introduce a substantial additional tax burden — potentially reaching 100% of the value of the property — in relation to certain property purchases made by non-EU, non-resident buyers.
However, as of September 2026 there is no 100% property purchase tax currently in force in Spain that a British buyer must pay simply because they are purchasing a Spanish home.
The proposal has not, at the time of writing, resulted in an applicable tax rule of this nature.
Therefore, prospective purchasers should calculate their transaction using the taxes that are currently in force, rather than on the basis of an announced political proposal that has not become applicable law.
The abolition of the property-based Spanish Golden Visa, on the other hand, is a different issue and is already in force.
For anyone considering purchasing property in Spain, the relevant benchmark should always be the legislation actually applicable on the date of the transaction.
8. Frequently Asked Questions
I Am British and Own an Apartment in Torrevieja That I Do Not Rent. Do I Still Have to File a Tax Return in Spain?
Generally, yes.
A non-resident property owner may be required to submit Modelo 210 for imputed property income during the periods in which the property is available for their own use.
Where there is more than one owner, each owner generally declares the proportion corresponding to their ownership share.
Why Do I Pay 24% While My German or Belgian Neighbour Pays 19%?
Because the IRNR rate applicable to this type of income depends in part on the taxpayer’s country of tax residence.
Tax residents of EU countries and certain EEA countries generally benefit from the 19% rate.
For a UK tax resident following Brexit, the general rate is 24%.
Can I Deduct My IBI and Community Fees From My Rental Income?
Under the current wording of Spanish Non-Resident Income Tax legislation, a UK tax resident does not benefit from the same ordinary expense-deduction regime available to qualifying EU/EEA residents.
However, the Spanish National Court has held in cases involving third-country residents that preventing the deduction of expenses directly linked to rental income may infringe the free movement of capital.
The matter is currently awaiting consideration by the Spanish Supreme Court.
For that reason, whether it is worthwhile seeking rectification of previous tax returns should be assessed on an individual basis.
How Many Years Back Can I Claim?
The general limitation period is four years.
However, it must be calculated separately for each tax return and tax period.
Once the ordinary right to rectify has expired, the amounts cannot normally be recovered through that route.
Extraordinary review procedures are exceptional.
If I Become Resident in Spain, Does This Problem Disappear?
IRNR ceases to apply in the same way once a person becomes Spanish tax resident.
However, Spanish Personal Income Tax — IRPF — then applies to worldwide income and additional tax and reporting obligations may arise.
The correct analysis is therefore not simply a comparison between 24% and 19%.
The taxpayer’s complete personal, family, financial and asset position should be considered.
I Have Not Filed Modelo 210 for Several Years. What Could Happen?
Failure to file may give rise to late-filing surcharges, interest and, where the statutory conditions are met, penalties.
A voluntary regularisation made before a formal notice from the Spanish Tax Agency can have very different consequences from regularisation after an investigation or request has already started.
It is therefore usually preferable to review the position before the Tax Agency makes contact.
I Am Selling. Will I Get the 3% Withholding Back?
If the final Spanish tax liability is lower than the 3% amount withheld, the seller may request repayment of the excess by filing Modelo 210.
The purchaser has one month from completion to pay the withholding through Modelo 211.
The seller then has the corresponding period to file the capital gains return.
Does the Same Problem Affect Irish, Belgian or Polish Property Owners?
Not in the same way.
Ireland, Belgium and Poland are members of the European Union.
Their tax residents can therefore generally apply the 19% rate and, subject to the statutory requirements, deduct qualifying expenses directly related to rental income.
9. Your Next Step
If you own property in Torrevieja and remain tax resident in the United Kingdom, a tax review can help determine:
- Your actual Spanish tax position as a non-resident property owner.
- Whether there are tax years that remain within the limitation period and where rectification may be worth considering.
- Whether any Modelo 210 returns remain outstanding or whether other Spanish tax obligations need to be regularised.
- Which tax strategy may be appropriate for future years.
Tax Review for Non-Resident Property Owners
At Antón & Asociados Abogados, we can review previous Modelo 210 returns, the taxation applied, the expenses that can be documented, the relevant limitation periods and the legal viability of a potential claim.
Our Tax Services in Torrevieja are available to both resident and non-resident property owners.
If you are still considering purchasing Spanish property, our Property Lawyer in Torrevieja service provides legal support for foreign purchasers, including Land Registry checks, contracts, NIE procedures, taxation and completion.
You may also find these published guides useful:
How to Buy Property in Spain as a Foreigner
Buying Property in Torrevieja: Legal Steps Every Foreigner Must Know
How to Avoid Property Scams in Spain
Tourist Licences on the Levante Coast
We are Antón & Asociados Abogados, lawyers in Torrevieja, with extensive experience assisting international clients with property, taxation, residence, inheritance and other legal matters connected with owning assets in Spain.
If, after reviewing the case, we conclude that a claim would not be advisable because of the amount involved, the available documentation or the current legal position, we will explain this before any procedure is started.
Contact Antón & Asociados Abogados
Telephone: (+34) 966 92 77 60
Email: info@antonasociados.es
Office: Avenida Alfredo Nobel, 8-12, 03183 Torrevieja, Alicante, Spain
Assistance available in English, Spanish, Russian, Ukrainian, French and Dutch.
This article is provided for general information purposes and does not constitute individual legal or tax advice. Tax rates, deadlines and administrative criteria referred to in this guide have been reviewed as of September 2026 and may change. The deductibility of expenses for tax residents of third countries remains a matter of litigation pending definitive guidance from the Spanish Supreme Court. Any potential claim should therefore be assessed individually.
Official Sources
This guide has been prepared and updated with reference to legislation published in Spain’s Official State Gazette — Boletín Oficial del Estado (BOE) — and official information provided by the Spanish Tax Agency, as well as the applicable legislation and case law of Spain and the European Union.
For additional information, see:
