Renting Out Your Spanish Property: Taxes for Resident and Non-Resident Landlords

Owning a flat in Barcelona, a villa on the Costa del Sol or a small studio in Madrid and renting it out can be a sound investment. But the tax treatment in Spain depends heavily on one question: are you a Spanish tax resident or not? The answer decides which tax you pay, how often you file, and which costs you can deduct.

In general, you are a Spanish tax resident if you spend more than 183 days a year in Spain or if your main economic interests are based here. Everyone else is a non-resident for tax purposes, whatever their nationality.

Two different taxes: IRPF and IRNR

Residents pay IRPF (Impuesto sobre la Renta de las Personas Físicas, Spanish personal income tax). Rental income is added to your other income, such as salary or business profits, and taxed in a single annual return, the Modelo 100. It is filed through the AEAT, the Spanish Tax Agency (Agencia Tributaria), in the spring campaign. Rental income is taxed at your progressive rate, so the more you earn overall, the higher the rate on the rent.

Non-residents pay IRNR (Impuesto sobre la Renta de No Residentes). Here the system is different: income is taxed separately, at a flat rate, and the return is the Modelo 210. You need a NIE (Número de Identidad de Extranjero), the tax identification number for foreigners, to file it.

The key practical difference is frequency. Rental income of a non-resident is normally declared quarterly, in a short window after each quarter ends. Many foreign landlords miss this because they assume one annual return is enough. Late filing can bring surcharges and penalties, so it is worth setting up a calendar or delegating the task.

Deductible expenses: the EU/EEA advantage

This is where the two groups differ most:

Non-residents who live in another EU or EEA country can deduct expenses directly linked to the rental, provided they can document them. Typical examples are mortgage interest, local property tax (IBI), community fees, home insurance, repairs and maintenance, utilities paid by the owner, and depreciation of the property. The flat rate is applied to the net profit.

Non-residents from outside the EU/EEA (for example the UK, the US or Switzerland, depending on the specific rules) generally pay a higher flat rate on the gross rent, with no expense deductions at all. In practice, a landlord with a mortgage and high running costs can end up paying tax on income they never really earned. Checking whether your country of residence qualifies is therefore the first step of any planning.

Residents can also deduct the expenses tied to the rental, and may benefit from a reduction on net rental income for long-term lets of a home used as the tenant’s main residence. This reduction has been tightened in recent years and now depends on the contract date and on local circumstances, so you should confirm the current conditions before relying on it. It does not apply to holiday lets or commercial premises.

If the property is not rented and you are a non-resident, Spain may still tax an imputed (deemed) income on a second home. It is declared on a separate annual Modelo 210.

Company tenants and withholding tax

If your tenant is a company or a self-employed professional renting the property for business use, a withholding obligation usually appears. The tenant keeps a percentage of each rent payment and pays it directly to the AEAT on your behalf, rather than paying you the full amount.

For a resident landlord, this is declared by the tenant through the Modelo 115 and you later deduct it in your IRPF return. For non-resident landlords, withholding by a Spanish tenant follows its own rules and its own form, so the process and your own filing duties may change. In both cases, check your invoices: the withholding must appear and the amounts must match what the tenant reports. Rent on commercial premises also usually carries VAT, whereas housing rent for residential use is generally exempt.

Whichever side you fall on, keep contracts, invoices and bank statements organised. Deductions are only as good as the paperwork behind them.

At Zythos Business we work every day with self-employed professionals and small businesses, including many foreign owners who manage Spanish property from abroad. We help clarify your residency position, file the right models on time, and make sure every deductible expense is claimed. If you are unsure which of these situations applies to you, a short consultation can save you considerable money and avoid unpleasant surprises with the tax authorities.