IRNR: What Non-Resident Property Owners in Spain Often Miss

Non-EU/EEA owners are taxed on gross rental income with no expense deductions, while EU/EEA owners are taxed on net income after deducting costs such as repairs, insurance, and management fees.

Who Has to Pay IRNR?

If a non-resident owner spends fewer than 183 days a year in Spain, any rental income received from a Spanish property is subject to IRNR — Impuesto sobre la Renta de No Residentes.

IRNR is separate from IBI, the municipal property tax, and must be paid in addition to it.

Different Tax Rules for EU/EEA and Non-EU Owners

The applicable rate and tax base depend on the owner's country of residence.

Residents of the EU and EEA pay 19% on net rental income. They may deduct eligible expenses such as mortgage interest, repairs, insurance, community fees, and property management costs.

Residents outside the EU and EEA — including owners from the United States, the United Kingdom, and most other countries — pay 24% on gross rental income. Under current Spanish domestic law, no expense deductions are allowed.

A recent Spanish court ruling has challenged this gross-income treatment for non-EU owners and may allow some owners to reclaim tax overpaid in previous years.

However, the applicable rate remains 24%, the ruling is not yet final, and owners should not assume that it applies automatically to their situation.

Vacant Properties Are Also Taxed

A detail many owners overlook is that a property may still be taxed even when it remains vacant and generates no rental income.

Spain applies an imputed or deemed income equal to 1.1% of the property's cadastral value. This increases to 2% if the cadastral value has not been revised within the last ten years.

The resulting deemed income is taxed at the same rate of 19% for EU/EEA residents or 24% for non-EU/EEA residents, regardless of whether the property earned any actual income.

Modelo 210 and Filing Deadlines

Since 2024, rental income has been declared annually rather than quarterly using Modelo 210.

The return covering the previous year's rental income must be filed between 1 and 20 January.

Missing the filing deadline or leaving a property undeclared for several years is a common issue. The Spanish tax authority has increased enforcement and can cross-reference property listings published on rental platforms with submitted tax returns.

Practical Takeaway for Property Owners

The largest tax cost for many non-resident owners is not necessarily the tax rate itself, but whether property-related expenses can be deducted.

For EU/EEA owners, a professionally managed property with properly documented repairs, insurance, community charges, and management expenses can materially reduce the taxable amount.

Non-EU/EEA owners should specifically determine whether the recent court ruling may apply to their circumstances before submitting a return or attempting to reclaim tax paid in previous years.