Is Mallorca a tax haven? What a non-resident owner really pays

The short answer

No. Mallorca is part of Spain and of the European Union, and a property owner here is taxed on buying, on owning, on letting and on selling, whatever the country of residence. Spanish VAT applies in the islands at the general rate of 21%. What gives the island its reputation is not a low-tax regime but two Balearic reliefs for inheritance and gifts and for new arrivals who move to work, and a wealth tax threshold that is higher than the State one.

The rest of this note follows the owner through the four stages, with the figures we use, and ends with a worked example.

Is Mallorca different from the rest of Spain?

Less than most people think. The Balearic Islands share the common Spanish tax system. Unlike the Canary Islands, they have no separate indirect tax and no special low-tax zone, and unlike the Basque Country and Navarre they do not collect their own taxes. The regional government can only adjust some taxes that the State cedes to it, chiefly transfer tax, wealth tax and inheritance and gift tax, and that is where the differences you hear about come from.

For a non-resident, the income tax on the house or the rent is a State tax with flat rates that the islands cannot change. Spain also takes part in the automatic exchange of financial account information, so a Spanish bank account is reported to the tax authority of your home country. A foreign company that holds the house does not escape either: it can attract a special annual tax of 3% of the cadastral value, as we explain in holding a Mallorca home through an LLC or a foreign company.

When you buy

Buying a resale home means paying transfer tax at the Balearic bands: 8% on the first 400,000 euros, 9% up to 600,000, 10% up to one million, 12% up to two million and 13% above that. Each rate applies to its own slice. The base is the reference value set by the Cadastre, or the price if it is higher. On a house of 1.5 million euros the tax comes to 150,000 euros, ten per cent of the price, before notary, registry and legal fees.

A new build bought from a developer carries 10% VAT instead, plus 1.5% stamp duty. In both cases this is money paid once and not recovered, so it belongs in the price you are prepared to offer.

Our buying and selling page sets out what we check before and after the deed.

Every year you own it

A non-resident owner files Tax Form 210 every year, even if the house is never let. Spanish law treats a home kept for your own use as producing a notional income: 1.1% of the cadastral value if it was reviewed in the last ten years, 2% if not. Residents of the EU, Iceland, Norway and Liechtenstein pay 19% on it, everyone else 24%. On a cadastral value of 300,000 euros that is 627 euros a year at 19%, or 792 euros at 24%. The amounts are modest. Not filing them is what becomes expensive.

The town hall charges IBI, the local property tax, on the same cadastral value, and most municipalities add a waste collection charge.

Wealth tax is the one most people do not expect. A non-resident pays it on Spanish assets only, mainly the house and the Spanish bank account. The State threshold is 700,000 euros, but a non-resident can elect the Balearic rules, with an exempt threshold of three million euros. The election is made in the return, so we file it even when nothing is payable. Above three million, the State solidarity tax on large fortunes can take back part of what the regional threshold saves, and the cap on combined liability, which the Tribunal Supremo has confirmed is available to non-residents, can reduce the bill again. It has to be modelled, not guessed.

If you let it

Rental income is declared on Tax Form 210 once a year, in April of the following year. Residents of the EU, Iceland, Norway and Liechtenstein pay 19% on the rent less expenses. Residents elsewhere, including the United Kingdom, Switzerland and the United States, pay 24%, and the tax office applies it to the gross rent with no deduction at all. A 2025 judgment of the Audiencia Nacional allowed expenses for non-EU landlords, but it is now before the Tribunal Supremo and the outcome is open. Holiday letting also needs a tourist licence and brings the tourist stay tax.

The rules are on our holiday rental page. If you are weighing a house that already has a licence, read what to check before buying with a tourist licence, and for the expenses question the refund for non-EU landlords.

When you sell

The buyer withholds 3% of the price and pays it to the tax office. That is a payment on account, not the tax. The tax is 19% of the gain for every non-resident, whatever the country, and the 3% is set against it in a return the seller must file. If the 3% exceeds the tax, the difference is refunded, but only on request.

The town hall also charges its own tax on the increase in land value, the plusvalía municipal. It is not due where the land has not gained in value, but that has to be shown, and the buyer answers for it when the seller is non-resident. That is why the deed usually retains part of the price to cover it.

The full sequence, with a worked comparison of two sellers, is in selling your Mallorca home: the 3% withholding, the municipal tax and the refund.

Where the islands are genuinely generous

The first is inheritance and gifts. Under the Balearic rules, spouses, children and parents receive a 100% relief on inheritance tax, with no upper limit, and since 25 July 2025 a 100% deduction on lifetime gifts. Non-resident heirs and donees can apply these rules when the property is in the islands. The relief has conditions: the value stated in the deed must not exceed the real value, the returns must be filed on time even when the result is nil, and the municipal land value tax is still payable. It also does not reach the donor's own tax on the gain when a house is given away during their lifetime.

The second is the Beckham regime for people who move to work. For the year of the move and the five years that follow, Spanish employment income is taxed at a flat 24% up to 600,000 euros, and most foreign income stays outside Spanish tax. It is not for retirees or passive investors, and it must be claimed within six months of registering with social security.

The relief is explained on our inheritance and gifts page, and the regime on the Beckham regime page, with the mistakes that cost people the status in five Beckham regime mistakes.

A worked example

Take a house bought at 1,200,000 euros with a cadastral value of 300,000 euros, used by the family for the summer and never let.

• On buying: transfer tax of 32,000 euros on the first 400,000, 18,000 on the next 200,000, 40,000 on the next 400,000 and 24,000 on the last 200,000. The total is 114,000 euros, 9.5% of the price, paid once.
• Every year: Tax Form 210 on the imputed income, 627 euros for an owner resident in the EU or the EEA and 792 euros for one resident elsewhere, plus the local IBI and the waste charge.
• Wealth tax: the Spanish assets are above the State threshold of 700,000 euros and below the Balearic threshold of three million. With the Balearic election made in the return, nothing is payable, but the election has to be made.
• On selling: 3% of the price withheld by the buyer and 19% tax on the gain, settled in a return, as in the note on selling.

These are illustrations with simple assumptions. A real case depends on the reference value, the purchase costs, the use of the house and the owner's country.

How long you stay changes the answer

Owning a house here does not make you a Spanish tax resident. Spending more than 183 days in Spain in a calendar year does, and so can having your centre of economic interests here. A resident is taxed on worldwide income and, above the threshold, on worldwide assets, which is a different calculation from everything above. If you are close to the line, start with how days in Spain decide tax residence, and if you are planning to move, with our moving to Mallorca page.

What it means for you

• Spain is not a low-tax jurisdiction, and it takes part in the automatic exchange of financial account information with other countries. Holding a Mallorca home through a company in a low-tax jurisdiction usually adds cost and reporting rather than saving tax.
• For an owner who comes for the summer, the annual cost is mostly local tax and a modest Form 210. For a wealthy owner, the wealth tax election is where most of the money is.
• The real advantages are inheritance planning within the family and, for those who move to work, the Beckham regime. Both depend on doing things in the right order.
• Your home country does not stop taxing you because you own a house here. If it taxes inheritances, a nil Spanish bill leaves nothing to credit against the tax at home.

If you hold Spanish assets of more than 700,000 euros, start with our wealth tax page. The annual return is explained on Tax Form 210, and the family rules on inheritance and gifts.

Sources: Articles 8, 9 and 10 of Balearic Decreto Legislativo 1/2014 on taxes ceded by the State; Ley 19/1991 on wealth tax; Ley 38/2022, temporary solidarity tax on large fortunes; articles 24, 25 and 31 of the consolidated Non-Resident Income Tax Act (Real Decreto Legislativo 5/2004); article 85 of the personal income tax act (Ley 35/2006); Ley 6/2025 of 23 July (Balearic inheritance and gift tax); article 93 of Ley 35/2006 (inbound expatriate regime); Tribunal Supremo judgments 1372/2025 and 1402/2025.

This page is general information and reflects the rules in force on the date shown. It is not advice and does not replace an assessment of your own case.