British, Swiss and American landlords: reclaiming Spanish tax paid on gross rent

What the court decided

The case concerned a resident of the United States who let a flat in Barcelona and asked to deduct the ordinary costs of the let: depreciation of the building and the furniture, community fees, IBI and municipal charges, repairs and maintenance, insurance and the services linked to the rental. The tax office and the central economic-administrative tribunal refused, relying on article 24.6 of the Non-Resident Income Tax Act, which reserves the deduction of expenses to residents of the European Union and the European Economic Area.

In its judgment of 28 July 2025 (appeal 636/2021) the Audiencia Nacional sided with the owner. Its main ground is the free movement of capital in article 63 of the Treaty on the Functioning of the European Union, which, unlike the other EU freedoms, also protects investments made from third countries. A property bought to let is such an investment, and taxing a non-EU investor on gross income while an EU investor is taxed on net income restricts it. The court also relied on the non-discrimination clause of the treaty between Spain and the United States.

The judgment does not touch the rate. Owners resident outside the EU and the EEA continue to pay 24%, against 19% for the rest. Nor does it extend to non-residents the reduction that Spanish residents enjoy on long-term residential lets.

Where things stand today

The judgment is not final: it can be appealed to the Tribunal Supremo, and the tax office has not changed its practice. Tax Form 210 filed by an owner resident outside the EU is still expected to declare the gross rent, and a return that deducts expenses is likely to be corrected by the office.

That is why the prudent route is not to deduct on the return itself, but to file as the office expects and then claim the difference back. A claim keeps the year alive while the courts settle the point. An owner who waits for a final ruling before doing anything will find that the oldest years have lapsed in the meantime.

The clock: four years, return by return

A refund can be claimed for four years, counted from the day after the deadline for filing each return. Rental income has been declared quarterly, so each quarter has its own clock. The return for the third quarter of 2022 was due by 20 October 2022, and the right to claim it back expires on 20 October 2026. The fourth quarter of 2022 follows in January 2027, and so on.

Filing the claim stops the clock for the returns it covers. It does not have to succeed at once to have done its job.

What can be deducted

The same expenses that an EU resident deducts, in proportion to the days the property was actually let:

• IBI, the municipal waste charge and other local charges on the property.
• Community of owners fees.
• Insurance on the building and its contents.
• Repairs and maintenance, which are not the same as improvements.
• Utilities paid by the owner, cleaning, laundry, and agency or platform commissions.
• Interest on a loan taken to buy or improve the property.
• Depreciation: 3% a year on the cost of the building, excluding the land, and 10% on furniture and equipment.

Every item needs an invoice or a receipt in the owner's name. Expenses for the weeks the owner used the property are not deductible; those weeks generate imputed income instead.

What it is worth

Take a villa let for the season with 40,000 euros of rent a year and 16,000 euros of deductible expenses, depreciation included. Taxed on gross rent, the owner paid 9,600 euros. Taxed on net income at the same 24%, the bill is 5,760 euros. The difference is 3,840 euros a year, or about 15,000 euros over four open years, plus the late payment interest that the tax office owes on refunds.

The figures are an illustration. The real amount depends on how much of the year the property was let and on how well the expenses are documented.

How the claim works

• The request. For each return, a request to rectify the self-assessment and refund the excess, setting out the expenses and the legal grounds. The tax office has six months to answer.
• The likely refusal. While the office keeps to its position, a refusal is the expected first answer. It opens the way to the economic-administrative tribunal and, from there, to the courts. That is the route the owner in the 2025 case followed.
• The wait. If the Tribunal Supremo confirms the criterion, the claims already filed are resolved in the owner's favour with interest. If it does not, the owner is back where they started, less the cost of the claim. Taking a refusal to court is a separate decision, with its own cost, that we discuss when the time comes.
• The cost. We quote a fixed amount for preparing and filing the claims, in writing and before starting, so that you can weigh it against the refund at stake.

Check your home country before you claim

A Spanish refund is not always a net gain. Residents of the United Kingdom and the United States are taxed at home on the same rent and credit the Spanish tax against it. Less Spanish tax can mean a smaller credit and more tax at home, so the saving has to be worked out on both sides, with your adviser there.

Residents of Switzerland are in a different position. Switzerland exempts income from property abroad and only takes it into account to fix the rate on other income, so a refund from Spain is, as a rule, money that stays with the owner.

What we need to look at your case

• The Tax Form 210 returns filed for rental income in the last four years, with proof of payment.
• Tenancy agreements or platform statements showing the days let each year.
• Invoices and receipts for the expenses of those years.
• The purchase deed and the IBI receipt, to work out depreciation.
• A certificate of tax residence for each year claimed.

What we do every year for owners who let is set out on our Tax Form 210 and holiday rental pages.

Sources: Audiencia Nacional, judgment of 28 July 2025 (appeal 636/2021); article 24 of the consolidated Non-Resident Income Tax Act (Real Decreto Legislativo 5/2004); article 23 of the personal income tax act (Ley 35/2006) and articles 13 and 14 of its regulations; article 63 of the Treaty on the Functioning of the European Union; articles 66, 67, 120.3 and 221 of the Ley General Tributaria.

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.