Deductible expenses for non-resident rental income outside the EU has recently gained significant attention. Recently, news has gone viral about a ruling by the Audiencia Nacional (SAN 3630/2025) that, for the first time, recognises the right of non-resident property owners from third countries (non‑European countries) to deduct the expenses necessary to obtain their rental income in Spain. Does this mean the law has changed? Not exactly.
It is not a legal change; it is a judicial ruling.
The ruling is a decision of a lower court. Although important, it does not amend the law. The Non‑Resident Income Tax (IRNR) law remains in force and requires non‑residents outside the EU/EEA to pay tax at 24 % on gross income, without any deduction of expenses.
The ruling has been appealed.
The State has lodged an appeal with the Supreme Court. Until there is a final judgment, it is likely that the Tax Agency will maintain its position: non‑EU/EEA residents cannot include expenses on form 210, and self‑assessments are calculated on the full amount.
Retroactive claims? Yes, but with prudence.
To avoid losing the right to recover what has been overpaid if the ruling is ultimately upheld, it is advisable to file rectification requests for the last four years. These claims interrupt the statute of limitations, but they will most likely be rejected at first and will have to be appealed.
Avoid risks in upcoming returns.
Including deductions of expenses in self‑assessments while the law has not changed could result in supplementary assessments and even penalties if the tax authorities consider that part of the tax has not been paid. The safest approach is to continue filing in accordance with the current rules and, at the same time,
start the appropriate claims. However, this will depend on each case and an assessment of the risks.
In conclusion, the ruling opens a promising avenue to end a longstanding discrimination, but for the moment it does not constitute an automatic change nor does it guarantee that the tax authorities will accept deductions or refunds. Until the Supreme Court confirms this doctrine, it is wise to act with caution. If you are a non‑resident property owner, contact us to discuss your case and design the most appropriate strategy.
Practical considerations for non-resident property owners:
Recent case law developments highlight the importance of assessing each situation on an individual basis. Not all scenarios involve the same level of risk or the same opportunities for tax optimisation.
In this context, it is essential not only to understand the current legal framework, but also to evaluate the potential impact of changes in legal interpretation and the practical consequences of each decision.
Proper planning allows you to anticipate different scenarios, minimise risks, and adopt an appropriate strategy both in tax filings and in potential claims.
ÁLVARO MORALES SOUSA
PARTNER – LAWYER
CUSTOM REPRESENTATIVE
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