How rental income is taxed for non-residents in Spain

Where it is declared and when

The tax on this income is the IRNR, and the vehicle is the Modelo 210. Rental income earned during a calendar year is grouped into a single annual return filed in the first twenty calendar days of January of the following year.

This is a significant change from the earlier system, under which rentals were declared quarterly. Many owners still follow older guidance and look for April, July and October deadlines that no longer apply to this case.

The rate depends on where you live, not where the house is

The rules distinguish two situations:

• Residents of the EU, Iceland and Norway: 19%, applied to the net income, that is, the rent less deductible expenses.
• Residents of any other country: 24%, applied to the gross income, with no possibility of deducting anything.

The real difference is far larger than the five percentage points on the rate. On a let with community fees, IBI, insurance and a live mortgage, costs can absorb a large share of the income: someone who can deduct them is taxed on a small base, while someone who cannot is taxed on everything received. This is the point that most surprises owners from outside the European area.

What EU and EEA residents can deduct

Only costs directly related to the income declared, and then only in proportion to the days the property was actually let:

• Community of owners fees and maintenance levies.
• IBI and municipal charges (refuse, drainage).
• Mortgage loan interest (the interest, not the capital repayment).
• Buildings, contents and rent-guarantee insurance.
• Repairs and upkeep: painting, replacing installations, repairing appliances. Not extensions or improvements, which are added to the acquisition value and recovered on sale.
• Depreciation of the building and of the furnishings, at the percentages set out in the rules.
• Utilities borne by the landlord, agency and management fees.

To deduct, you must keep invoices in the owner's name. A bank receipt without an invoice is usually not enough if the Agencia Tributaria asks for evidence.

The 60% reduction does not apply

Resident income tax (IRPF) includes a reduction of net income for letting a property as someone's main home. That reduction belongs to the IRPF and is not available under the IRNR, so a non-resident owner cannot use it even on a long-term let that is the tenant's permanent home. It is a frequent source of confusion when comparing with what a resident neighbour pays.

The months the property is not let

If the property is let for only part of the year, the rest of the time is not exempt: it generates imputed income, calculated on the cadastral value and in proportion to the days the property was at your disposal. In practice, an owner who lets seasonally files two things for the same property: the annual rental return in January, and the imputed income return for the remaining period, with its own deadline across the following year.

Holiday lets: extra obligations

If the property is destined for holiday letting, administrative duties are added to the tax ones. In the Valencian Community the property must be entered in the Tourism Registry and, before that, obtain a certificate of urban compatibility from the town hall. Without that registration the activity is irregular, regardless of whether the income is declared correctly.

In addition, if you provide services typical of the hotel industry alongside the accommodation — cleaning during the stay, catering, regular changes of linen — the activity may cease to be a simple letting and be treated as a business activity, with different tax treatment. That is worth analysing before you start, not afterwards.

Does the tenant withhold tax?

It depends who they are. A private individual renting a home to live in does not withhold. A company or a professional renting the property for their business, on the other hand, is obliged to withhold and pay over on account of the owner's IRNR. In that case the owner offsets the amount withheld when filing the return, and will need the withholding certificate from the tenant.

The documents we prepare

• The tenancy agreement or agreements for the year, with their dates.
• A month-by-month breakdown of the rent received.
• Invoices for deductible expenses and the IBI receipt.
• The purchase deed, to calculate depreciation.
• A certificate of tax residence, where a treaty is being applied.
• NIE and the ownership share of each owner.

Where a property has several owners, each declares their own share separately. At Asistenio we prepare the calculation, file both the annual rental return and the imputed income return for the unlet period, and can take on fiscal representation to receive notifications on your behalf. You can also see how we work with clients who live outside Spain.