Spain’s National Court has ended tax discrimination for non-EU property owners, granting them the right to deduct rental expenses and reclaim overpaid taxes. Learn how Brits, Americans, and others can save thousands on Spanish property taxes in 2025.

Major Tax Break for Non-Resident Property Owners in Spain After Landmark 2025 Court Ruling

If you are a non-resident property owner in Spain, 2025 has brought major good news! A game-changing court decision now allows non-EU owners the same rights to deduct rental expenses as EU residents, and even opens the door to significant tax refunds for the previous four years. Here’s what you need to know about Spanish taxes for non-resident property owners and how to take advantage of these sweeping changes.

Court Ruling Ends Discrimination Against Non-EU Landlords

On July 28, 2025, Spain’s National Court struck down a long-standing tax rule that discriminated against non-EU, non-resident property owners. Previously, only EU and EEA (European Economic Area) property investors could deduct costs like repairs, mortgage interest, insurance, and property management expenses from their Spanish rental income. Non-EU owners—including popular nationalities like British, American, and Latin American investors—paid a punishing 24% tax on the full (gross) rental amount, with no deductions allowed.

This unfair taxation often resulted in thousands of euros in overpayments each year for non-EU landlords.

What Has Changed for Non-Resident Property Owners?

The July 2025 court ruling brings non-EU property owners onto an equal footing with their EU counterparts. Moving forward, ALL non-resident owners can now:

• Deduct legitimate rental expenses (mortgage interest, maintenance, insurance, management fees, etc.) from Spanish property income
• Pay tax only on net rental income (income after expenses), rather than the full sum

Mediterranean property expert Tim Negru of AffordiHome confirms:

“Non-EU owners will now pay tax only on their actual rental profits, not on the gross receipts. This will save them thousands each year.”

Claim Back Four Years of Overpaid Spanish Tax

Perhaps even more beneficial: the court’s decision is retroactive, allowing non-EU owners to reclaim up to four years of overpaid tax. This means property owners may recover thousands—sometimes tens of thousands—of euros in refunds from the Spanish tax office.

It is crucial to collect tax returns, expense invoices, and file your claim as soon as possible to benefit from this unprecedented change.

Could Tax Rates Also Drop For Non-EU Owners?

Currently, EU/EEA non-residents are taxed at 19% on net income, while non-EU owners pay 24%. Spain’s Supreme Court is expected to rule soon on whether non-EU owners should also benefit from the lower 19% tax rate and up to 50–60% rental income reductions already available to Spanish residents.

Impact on Spain’s “100% Housing Tax” Proposal

This court victory may also undermine the Spanish government’s controversial attempt to impose excessive taxes on non-EU buyers, a measure widely criticized for threatening foreign investment, especially along the sought-after Spanish coasts popular with British and American property owners.

Will Other Countries Follow Spain’s Lead?

The legal argument that led to this victory—based on Article 63 TFEU—may set a legal precedent in other EU countries, such as Italy, which maintain harsh rules for non-resident owners.

What Should Non-Resident Property Owners in Spain Do Now?

1. Gather all rental income and expense documents for the past four years.
2. Consult a Spanish tax advisor: Ensure you qualify for deductions and start the refund process.
3. Monitor further legal developments: The situation may improve further if the tax rate for non-EU owners is lowered.

In Summary

• Non-resident non-EU property owners in Spain can now subtract expenses from rental income before calculating taxes.
• Many can reclaim refunds for overpaid taxes from the last four years.
• More favorable changes may be coming soon, including lower tax rates.

If you own Spanish property and live abroad, don’t miss out—this 2025 court ruling could save you thousands!