Renting out a property in Spain is an attractive option for many owners to generate regular income and cover the costs of their holiday home. But as promising as the rental income may seem, the associated tax obligations can be quite complex.
This is especially true for non-residents, who face a range of rules, deadlines, and regional variations. It is essential to be aware of these in order to avoid costly mistakes and issues with the Spanish tax authorities.
We explain both how taxation for non-residents works and which advantageous regulations apply to landlords residing in Spain.
CONTENT
- The basics: Who pays how much tax, and when, on renting out property in Spain?
- The annual tax return (Modelo 210): Deadlines and process
- What can be deducted from tax? – Making smart use of expenses (for EU citizens)
- What about regional differences?
- Important special cases and recent changes
- Professional advice on taxation of rental property in Spain
The basics: Who pays how much tax, and when, on renting out property in Spain?
If you own a property in Spain and let it out, and you are subject to unlimited tax liability in a different country, you will be liable to pay Non-Resident Income Tax (NRIT) in Spain. The way this tax is calculated depends primarily on one key factor: your nationality or tax residency.
The major difference for non-residents: EU-citizens vs non-EU-citizens
This is one of the most important – and often most expensive – distinctions in Spanish tax law for non-residents. The rule concerning EU citizenship is clearly defined and has significant financial consequences:
- As a citizen of the EU (including Iceland and Norway):
You are taxed at a rate of 19%. The key advantage is that this rate is applied to your net rental income. This means you are allowed to deduct certain expenses associated with the rental from your income.
- As a non-EU citizen (e.g. from Switzerland, the UK, or the USA):
You are taxed at a significantly higher rate of 24%, and this rate is applied to your gross rental income. In this case, no deduction of expenses is permitted.
And what applies to residents in Spain
If you are tax resident in Spain, fundamentally different and often more advantageous rules apply. Your rental income is not taxed at a flat rate via the Modelo 210, but is declared as income from real estate capital (rendimientos del capital inmobiliario) within your annual income tax return (Declaración de la Renta, IRPF).
The major advantage: If you rent out your property as a permanent residence (vivienda habitual) to a private individual, you benefit from a significant tax relief. Since 2024, you can deduct 50% of the net profit from the rental from your taxable base.
The calculation is therefore carried out in two steps: First, you determine the net profit by deducting all attributable costs (property tax, interest, repairs, depreciation, etc.) from the gross income. You then deduct the 50% reduction from this net profit. Only the remaining amount is taxed together with your other income (e.g. salary) at the progressive income tax rate.
Important for Dutch and British residents:
Since the Netherlands remains an EU member, Dutch residents benefit from the 19% tax rate on net income, with expense deductions allowed.
UK residents, however, are treated as non-EU citizens following Brexit and are therefore subject to the 24% tax rate on gross income, with no deductions allowed.
The annual tax return (Modelo 210): Deadlines and process
An important simplification came into effect at the beginning of 2024: The previous quarterly tax returns for rental income earned by non-residents have been abolished. Instead, you are now only required to submit one annual tax return for all rental income received during the calendar year.
The deadline for submitting this annual return using Form Modelo 210 is from 1 to 20 January of the following year. Therefore, all rental income earned in 2025 must be declared—and the corresponding tax paid—by 20 January 2026. In the case of short-term holiday lets with multiple different rental agreements, all rental income for the year is totalled and submitted in a single declaration.
Do I have to pay tax on vacant property in Spain?
A frequently overlooked point: Even for periods when your property is vacant, you are still required to file a Modelo 210 tax return. In this case, a notional rental value is taxed, which is calculated as a percentage of your property’s cadastral value (usually 1.1% or 2%, depending on the municipality).
Important notes for Dutch and British residents:
This rule applies equally to non-resident landlords from both the Netherlands and the United Kingdom. Even if your Spanish property is not let during the year, you must still submit a Modelo 210 return and pay tax on the deemed rental value.
What can be deducted from tax? – Making smart use of expenses (for EU citizens)
As an EU citizen, you have the significant advantage of being able to deduct a range of expenses from your rental income. The key requirement is that the expenses must be directly related to generating rental income in Spain, and you must be able to provide invoices that comply with Spanish formal requirements.
Deductible expenses: An overview
A distinction is made between expenses that are 100% deductible (as they are directly caused by a tenant) and those that can only be deducted proportionally based on the length of the rental period.
- Directly attributable and 100% deductible expenses:
These are costs that arise solely because the property is being rented out. Examples include:
Commission fees for booking platforms such as Airbnb or Booking.com
Cleaning costs after a guest’s stay
Fees charged by a letting agency for managing the rental - Proportionally deductible expenses:
These are ongoing costs that can only be claimed proportionally for the days the property is rented out. This includes:
Utilities such as electricity and water
Local taxes such as property tax (Impuesto sobre Bienes Inmuebles, IBI)
Community fees
Insurance premiums
Mortgage interest
Depreciation on the property and its furnishings
Important for Dutch and British residents:
Dutch citizens, as EU residents, are eligible to deduct all the expenses listed above, provided the Spanish invoicing requirements are met.
British citizens, now classed as non-EU residents, are not permitted to deduct any expenses. The Spanish tax authority applies the full tax rate to gross rental income, regardless of actual costs.Tax Tip: Carry forward losses correctly and prioritise deductions
Tax Tip: Carry forward losses correctly and prioritise deductions
What happens if your deductible expenses in a given year exceed your rental income? You can carry forward this loss for up to four years and offset it against future profits.
However, there is one important caveat: Only mortgage interest and renovation/maintenance costs may be carried forward as a loss to future years. Other expenses – such as depreciation, property tax, etc. – can only reduce the tax base down to zero, but cannot generate a loss that is eligible for carry forward.
Practical Tip:
From a tax perspective, it is wise to first deduct the directly attributable expenses and standard depreciation in your declaration. Only afterwards should you apply the interest payments and renovation costs. If these lead to a loss, that specific amount may then be carried forward into the following years.
What about regional differences?
Spain wouldn’t be Spain without regional peculiarities, even when it comes to rental properties. These differences don’t affect income tax itself as much as they do administrative registration requirements and additional taxes, such as tourist taxes or VAT.
The following table provides a simplified overview of tourist rentals (excluding hotel services) by non-residents:
| Region | Business Registration (Form 036/037) | Business Tax (Form 840) | Sales Tax (IVA/IGIC) | Regional Tourist Tax |
| Catalonia, Andalusia, Valencia etc. (Mainland) | Not required | Not required | Not required | Yes, payable quarterly |
| Balearic Islands (Mallorca, Ibiza etc.) | Required | Not required* | Not required | Yes, payable annually |
| Canary Islands (Tenerife, Gran Canaria etc.) | Required | Not required* | Yes, IGIC (7%) quarterly | No |
| Basque Country (e.g. Donostia) | Required | Required | Not required | Yes, as a municipal tax |
*Provided registration is made under the correct tax classification (Epígrafe).
Since 1 January 2024, it has been mandatory to charge and remit the Canarian sales tax (IGIC) at a rate of 7% for tourist rentals on the Canary Islands, even for small-scale landlords. This also opens up the possibility of reclaiming input tax—for example, from invoices issued by tradespeople or booking platforms.
Important special cases and recent changes
Two aspects deserve special attention, as they often lead to uncertainty:
Renting out property in Spain through agencies and platforms
If your property is let via an agency, it’s important to distinguish the agency’s role:
If the agency acts only as an intermediary, they will issue you an invoice for their services that includes VAT.
If the agency acts as the principal landlord in the eyes of the tenant, you as the property owner may need to invoice the agency with VAT.
In cases of rental to hotel operators or agencies, the reverse charge mechanism often applies – especially on the Canary Islands, and since 2023, also on the mainland and Balearic Islands. Under this system, the tenant (the agency) is responsible for remitting the VAT.
The link to the Netherlands and the UK: Double taxation agreements
If you are a tax resident in Germany, you must also declare your Spanish rental income in Germany. Thanks to the double taxation agreement (DTA), the tax paid in Spain is credited against your German tax liability, preventing double taxation.
However, be aware of the progression clause, which may increase your overall German tax rate.
The same principles apply to tax residents of:
– The Netherlands:
Spanish rental income must be declared under Dutch tax law, and tax relief is granted through the double taxation treaty between Spain and the Netherlands.
– The United Kingdom:
UK residents must also declare their Spanish rental income to HMRC. Under the UK–Spain tax treaty, Spanish tax can be offset against your UK liability—but as with Germany, progression rules may still affect your tax rate.
Professional advice on taxation of rental property in Spain
Renting out a property in Spain can be financially worthwhile—even when taxes are considered.
Understanding the differences between EU and non-EU citizens, correctly deducting allowable expenses, accounting for regional rules, and meeting annual filing obligations is essential.
Global Tax Saving supports you with a team of specialised tax advisors and lawyers to help you meet your Spanish tax obligations correctly—and optimise your financial outcome.
