Income derived from real estate located in Spain is subject to Non-Resident Income Tax.
If a property is owned by several individuals, each of them is considered an independent taxpayer and must file separate tax returns.
The types of income that property-owning taxpayers may obtain are:
1. Imputed Income from Urban Property for Own Use
Domestic legislation
According to Article 13.1.h) of the Non-Resident Income Tax Law (LIRNR), non-resident individual taxpayers who own urban properties located in Spain, used for their own purposes or left vacant, are subject to Non-Resident Income Tax on the imputed income corresponding to those properties.
Tax treaties
In accordance with Double Taxation Agreements, income derived from real estate may be taxed in the country where the property is located, whether it arises from direct use or enjoyment, leasing, or any other form of exploitation.
Non-resident taxation
The taxable base corresponding to the imputed income from urban real estate located in Spain is determined by applying a percentage to the cadastral value of the property:
- 1.1% if the cadastral value has been updated
- 2% in other cases
Tax is levied on this taxable base without deducting any expenses.
The applicable tax rates are:
- EU residents, Iceland, Norway, and (since 11/07/2021) Liechtenstein: 19%
- Other taxpayers: 24%
2. Income from Rented Property
Domestic legislation
According to Article 13.1.g) of the Non-Resident Income Tax Law, income derived directly or indirectly from real estate located in Spain, or from rights relating thereto, is considered income obtained in Spanish territory.
Tax treaties
Tax treaties signed by Spain grant taxing rights over real estate income to the country where the property is located. Therefore, income derived from real estate located in Spain may be taxed under Spanish law.
Non-resident taxation
Income must be taxed separately for each accrual, whether total or partial.
As a general rule, the taxable base is the gross amount received, without deducting any expenses.
In the case of rented properties, the taxable income includes the total amount received from the tenant for all concepts, including any goods transferred with the property, excluding VAT.
If the property is rented only for part of the year, income must be calculated as above for the rental period, and for the remaining period, the proportional part of the imputed income must be calculated (1.1% or 2% of the cadastral value).
However, for taxpayers resident in another EU Member State or in a European Economic Area country, the following expenses may be deducted when determining the taxable base:
- For individuals: expenses provided for under the Personal Income Tax Law
- For entities: deductible expenses under the Corporate Income Tax Law
The applicable tax rates are:
- EU residents, Iceland, Norway, and Liechtenstein: 19%
- Other taxpayers: 24%
Deductions: Only deductions for donations and any withholdings applied to the income may be deducted from the tax liability.
Filing: As a new feature effective from 01/01/2024, these incomes may be reported annually in aggregate, and filing must be completed within the first 20 days of the following year (until January 20).
3. Capital Gain from Transfer of Property
Domestic legislation
According to Article 13.1.i) of the Non-Resident Income Tax Law, capital gains derived from real estate located in Spain are considered income obtained in Spanish territory.
Tax treaties
Under tax treaties signed by Spain, gains derived from the transfer of real estate located in Spain may be taxed in Spain.
Non-resident taxation
Income obtained without a permanent establishment must be taxed separately for each accrual.
The taxable base for capital gains is generally determined in accordance with Personal Income Tax rules. Gains are calculated as the difference between the transfer value and the acquisition value.
The applicable tax rate is 19%.
Deductions: Only deductions for donations and the withholding made by the buyer may be deducted from the tax liability.
Withholding tax
The purchaser of the property, whether resident or not, is required to withhold and pay to the Spanish Treasury 3% of the agreed purchase price. This withholding acts as a payment on account of the tax due on the capital gain for the seller.
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