{"id":68264,"date":"2025-09-02T15:45:42","date_gmt":"2025-09-02T15:45:42","guid":{"rendered":"https:\/\/perezdevargas.es\/?p=68264"},"modified":"2025-09-03T08:29:00","modified_gmt":"2025-09-03T08:29:00","slug":"non-european-residents-may-also-deduct-expenses-from-rental-income-in-spain","status":"publish","type":"post","link":"https:\/\/perezdevargas.es\/en\/blog\/non-european-residents-may-also-deduct-expenses-from-rental-income-in-spain\/","title":{"rendered":"Non-European residents may also deduct expenses from rental income in Spain."},"content":{"rendered":"\n

A Judgment of 28 July, handed down by the Administrative Chamber of the National Court (Audiencia Nacional), recognised the right of a non-EU citizen to deduct expenses arising from rental income generated in Spain for Non-Resident Income Tax (IRNR) purposes<\/strong>, on the same terms as residents of the European Union or the European Economic Area.<\/p>\n\n\n\n


The ruling is not final<\/strong>, meaning that the State Attorney\u2019s Office may lodge an appeal before the Supreme Court (Art. 85 LJCA).<\/p>\n\n\n\n


If confirmed, the judgment would pave the way for non-EU nationals to claim refunds of Non-Resident Income Tax (IRNR) for fiscal years not yet time-barred.<\/strong><\/p>\n\n\n\n


The dispute arose from a claim by a United States resident against the TEAC’s ruling confirming the Spanish Tax Agency\u2019s refusal to allow the deduction of such expenses. The claimant argued that, in accordance with the case law of the CJEU, the free movement of capital established in Article 63 TFEU also protects third-country residents, and invoked Article 25 of the Double Taxation Agreement between Spain and the United States, which prohibits discrimination between nationals of both States.
<\/p>\n\n\n\n

The National Court upheld the appeal and ruled that Article 24.6 of the IRNR Law must be interpreted in accordance with European law, extending its scope to third country residents. The ruling prohibits less favourable tax treatment based on residence, considering it a restriction on the free movement of capital, and recognises the claimant\u2019s right to apply the relevant deductions on the same terms as EU\/EEA residents, provided that statutory requirements are met.<\/p>\n\n\n\n


This judgment marks a further step in the process of aligning Spanish legislation with EU rules, as interpreted by the CJEU.<\/p>\n\n\n\n


Its timing may prove significant, as on 22 May the governing socialist party introduced a bill containing a package of housing measures, including the creation of a State Supplementary Tax on the Transfer of Real Estate to Non-EU residents.<\/strong> The proposal seeks to increase the cost of acquiring property for foreign residents outside the EU by imposing a 100% surcharge on the purchase price. This tax would apply solely to the resale property market, excluding first transfers subject to VAT.<\/p>\n\n\n\n


In light of the National Court\u2019s reasoning and the CJEU\u2019s interpretation of the principle of free movement of capital, such a measure is incompatible with EU law, as it constitutes fiscal discrimination against non-EU residents<\/strong>. This is without prejudice to the fact that it also raises serious constitutional concerns given its confiscatory effect.<\/strong>
<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

A Judgment of 28 July, handed down by the Administrative Chamber of the National Court (Audiencia Nacional), recognised the right 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