Tax on Rental Income in Spain: What Non-Resident Landlords Owe

Non-resident property owners in Spain face two distinct tax charges, and many owners are unaware of the second one. The first is tax on actual rental income during periods when the property is occupied by paying tenants. The second is imputed income tax during periods when the property is empty or used personally. Both are filed using Modelo 210, but they are calculated differently and have different filing schedules. You cannot avoid either: if you own Spanish property and are not a Spanish tax resident, both apply.

The rental income tax is filed quarterly for the periods during which the property was rented. The imputed income tax is filed once annually, covering the total number of days the property was not rented. For a typical holiday let that is rented for 120 days and empty for 245 days, you would file quarterly returns for the rental income and one annual return for the imputed income on the 245 empty days. Many non-resident owners we work with were filing only the rental returns and ignoring the imputed income obligation, which is a compliance risk.

Both filings use the same Modelo 210 form but with different income type codes. Rental income uses type code 01, and imputed income uses type code 02. The deadlines, rates, and deduction rules differ between the two, which is why we recommend engaging a fiscal representative (representante fiscal) to handle the filings rather than attempting them independently.

If you are tax resident in an EU or EEA country, your Spanish rental income is taxed at a flat 19% on net income. This is the critical advantage: net income means you can deduct all expenses directly related to generating the rental income before calculating the tax. Deductible expenses include mortgage interest (on the Spanish property only), property insurance, IBI (council tax), community fees, property management fees, cleaning and maintenance, advertising costs, utility bills paid by the owner, repair costs, legal and accounting fees, and depreciation of the building (3% of the construction value annually, excluding land).

The depreciation deduction is particularly valuable and often overlooked. If you bought an apartment for €500,000 and the catastral value splits 60% building / 40% land, the depreciable building value is €300,000. At 3% per year, that is a €9,000 annual deduction from your rental income. On a property generating €30,000 in gross rent, this single deduction eliminates 30% of your taxable income before any other expenses are considered.

We typically advise EU-resident clients to keep detailed records of every expense, including receipts for minor repairs, cleaning supplies, and even travel costs to inspect the property (provided these are reasonable and documented). The difference between filing with comprehensive expense documentation and filing with minimal deductions can be €2,000-5,000 per year in tax savings on a mid-range Costa del Sol apartment.

Non-EU residents (including UK residents since Brexit) are taxed at 24% on gross rental income. The word "gross" is the painful part: you cannot deduct any expenses. Not mortgage interest, not management fees, not IBI, not repairs. The full rental income as received is the taxable base. This creates a significant disadvantage compared to EU-resident landlords operating in the same market.

To illustrate the impact: consider a €600,000 apartment generating €36,000 in annual gross rental income with €12,000 in deductible expenses (mortgage interest, IBI, community, management). An EU-resident owner pays 19% on €24,000 (net) = €4,560. A UK-resident owner pays 24% on €36,000 (gross) = €8,640. The UK owner pays almost double, despite owning the same property and generating the same rental income. Over a 10-year holding period, this difference compounds to €40,800 in additional tax paid.

There is ongoing legal debate about whether this differential treatment violates EU free movement of capital principles, and several cases have been brought before Spanish courts. As of 2026, the position remains unchanged: non-EU residents pay 24% on gross. However, we advise affected clients to file protective claims (recursos) each year reserving their right to challenge the differential rate, in case the law changes retroactively. Some Spanish lawyers believe a European Court of Justice ruling could eventually force Spain to equalise the treatment.

When your property is not rented, Spain imputes a fictional income based on the catastral value and taxes it. The imputed income rate is 1.1% of the catastral value for properties whose catastral value has been revised within the last 10 years, or 2% for properties with older catastral valuations. This imputed amount is then taxed at 19% for EU/EEA residents or 24% for non-EU residents. The calculation is pro-rated for the exact number of days the property was empty.

For a concrete example: a property with a catastral value of €250,000 (revised recently, so 1.1% applies) that sits empty for 200 days. The imputed income is €250,000 x 1.1% x (200/365) = €1,507. An EU resident pays 19% on this: €286. A non-EU resident pays 24%: €362. The amounts are not huge, but the compliance obligation is what matters: failure to file results in penalties that can exceed the tax itself.

Properties used personally by the owner are treated the same as empty properties for imputed income purposes. If you use your Marbella apartment for 60 days of holiday and it is empty for another 180 days, the imputed income applies to all 240 non-rented days. There is no personal-use exemption for non-residents. This is another area where we see persistent non-compliance: owners assume that if they are not renting the property, no tax obligation exists. That assumption is incorrect.

Rental income Modelo 210 filings follow a quarterly calendar. Income earned in Q1 (January to March) must be filed by 20 April. Q2 (April to June) by 20 July. Q3 (July to September) by 20 October. Q4 (October to December) by 20 January of the following year. Each filing covers the rental income received during that quarter, and the tax is payable at the time of filing. If you have no rental income in a particular quarter, no rental filing is required for that period.

The imputed income filing is annual. For the calendar year 2025, imputed income is declared on a single Modelo 210 filed by 31 December 2026. This longer deadline gives more time but also creates a risk of forgetting. We set calendar reminders for all our clients’ filing dates and recommend that property management companies include tax filing reminders as part of their service. Some fiscal representatives offer a flat annual fee (€300-600) covering all four quarterly filings plus the annual imputed income return.

Late filing penalties vary. Voluntary late filing (before any tax authority notification) incurs a surcharge of 5% if filed within 3 months, 10% within 6 months, 15% within 12 months, and 20% after 12 months plus interest. If the tax authority identifies the non-filing first, penalties of 50-150% of the tax due can apply, plus interest from the original due date. Given the relatively small amounts involved, the penalties often dwarf the tax itself, which makes timely compliance critical.

Consider an apartment purchased for €500,000 in Nueva Andalucía with a catastral value of €200,000 (60% building, 40% land). The property generates €30,000 in gross annual rental income over approximately 150 rented days, with annual expenses of €8,000 (IBI: €1,200, community fees: €2,400, management and cleaning: €3,000, insurance: €600, minor repairs: €800) plus €3,600 in depreciation (3% of €120,000 building value). Total deductible expenses: €11,600.

For an EU-resident owner: rental income tax is 19% of (€30,000 minus €11,600) = 19% of €18,400 = €3,496. Imputed income for 215 empty days: €200,000 x 1.1% x (215/365) = €1,296, taxed at 19% = €246. Total annual Spanish tax: €3,742. For a non-EU resident owner: rental income tax is 24% of €30,000 (no deductions) = €7,200. Imputed income: €1,296 taxed at 24% = €311. Total annual Spanish tax: €7,511.

The difference is €3,769 per year, driven entirely by the inability of non-EU residents to deduct expenses and the higher tax rate. Over a 10-year holding period, the non-EU owner pays €37,690 more in Spanish rental-related taxes. This is a material factor in investment return calculations and one we always model for clients comparing Costa del Sol purchases with rental properties in other jurisdictions.

Andalucía requires a tourist accommodation licence (VFT, Vivienda con Fines Turísticos) for any short-term rental of less than two months. Operating without a VFT licence can result in fines of €2,000-150,000. The licence application requires proof of habitability, minimum equipment standards (air conditioning, first aid kit, tourist information), and liability insurance. Once licensed, the property is registered with the Junta de Andalucía and appears in the Tourism Registry.

From a tax perspective, the VFT registration creates a paper trail. Booking platforms like Airbnb and Booking.com report income data to Spanish tax authorities under the EU’s DAC7 directive (effective since January 2024). This means the Agencia Tributaria knows exactly how much rental income your property generated through these platforms. Filing false returns or not filing at all is significantly riskier than it was five years ago. We have seen several clients receive notification letters from Hacienda referencing platform-reported income that did not match their Modelo 210 declarations.

Marbella and some other Costa del Sol municipalities have tightened VFT licensing in recent years, with moratoriums on new licences in certain zones. If you are buying for rental investment, verify the VFT licence status before purchasing. A transferable, active VFT licence adds tangible value to the property. Properties without a licence but in restricted zones may not be able to obtain one, which limits them to long-term rentals (contracts of 12+ months) with lower yields but simpler tax treatment.