Big Tax Break for Non-EU Property Owners in Spain: Rental Expenses Now Deductible

Spain has taken a major step towards levelling the playing field for international property investors. A landmark ruling by Spain’s National Court now allows non-EU property owners in Spain to deduct their rental expenses, claim tax refunds, and reduce future tax liabilities.

For international buyers from countries such as the UK, USA, the Middle East and beyond , this change brings fairer tax treatment and boosts confidence in investing in prime Spanish destinations like Marbella, Costa del Sol and other sought-after coastal areas.

Until recently, non-EU property owners renting out homes in Spain faced strict rules that blocked them from deducting everyday rental expenses. This meant they had to declare gross rental income in full, taxed at 24% .

By contrast, EU property owners could deduct costs such as:

• Community fees and maintenance
  
• Cleaning and repairs
  
• Insurance and IBI (property tax)
  
• Mortgage interest and agency fees
  

EU residents paid just 19% tax on their net rental income (after expenses), while non-EU owners shouldered an unfairly high burden.This unequal system was widely criticised, and the Spanish National Court has now confirmed it was discriminatory .

The case was sparked by a US property owner in Barcelona , ​​who challenged the Spanish tax authority’s position. The Court sided with the investor, citing rulings from the European Court of Justice and Spain’s Supreme Court , both of which had already rejected discriminatory tax treatment based on nationality or residence.

The result: residence can no longer be used as grounds for imposing harsher tax rules . This decision opens the door for thousands of non-EU owners to reclaim overpaid taxes and benefit from fairer tax treatment moving forward.

From now on, non-EU property owners in Spain can deduct legitimate expenses when filing rental income declarations, significantly reducing their overall tax bill.

• Refunds: Many non-EU investors can now reclaim overpayments from previous years where expenses were excluded.
  
• Lower future taxes: Deductible expenses will reduce taxable income, making rental investments more profitable.
  
• More certainty: The ruling boosts investor confidence, particularly among British and American buyers — key markets for Marbella and the Costa del Sol.
  

Although the tax rates remain different (19% EU vs. 24% non-EU), the ability to deduct expenses brings far fairer treatment and greater security.

If you’re a non-EU property owner, you may be entitled to claim back thousands of euros in overpaid taxes. Here’s the step-by-step process:

1. Gather documentation – Collect rental income records, invoices (‘invoices’), and previous filings of Model 210 .
   
2. Prepare rectifying returns – Amend past declarations (typically the last 4 years) based on net rental income. Attach references to the National Court ruling (August 2025) and EU law principles.
   
3. Submit to Hacienda – File the revised Model 210 online or via a tax representative.
   
4. Retain records – Keep all evidence for at least 4 years in case of review or appeal.
   

Seek professional help – A tax advisor or lawyer can ensure accuracy and strengthen your submission.

Marbella is already one of Europe’s most attractive destinations for international buyers, thanks to its luxury lifestyle, sunshine, and strong rental demand. This ruling provides an additional incentive, making Spain and Marbella in particular an even safer and more profitable place to invest.

By reducing tax burdens and offering clarity for non-EU investors, the decision is likely to increase property sales, luxury rentals, and overall confidence in the Spanish market.

This historic judgment gives non-EU property owners in Spain fairer treatment, access to tax refunds, and stronger legal protection. For investors, it means more profitability, more certainty, and more reasons to choose Marbella and the Costa del Sol as their preferred destination.

At Engel & Völkers Marbella , we work with international clients every day guiding them through property purchases and investment opportunities.