Rental Income Tax — What Landlords Actually Pay

If you’ve bought property in Spain and rent it out, whether long-term, seasonally, or as a licensed tourist rental, the income needs to be declared, and how much tax you pay depends largely on your residency status.

If you’re a non-resident from the EU or EEA

• Flat rate: 19% on net rental income.
• Deductible expenses allowed: community fees, maintenance, insurance, IBI, waste tax, electricity, water, alarm, internet, management company commission.
• Tax is calculated on net income, not gross rent, filed quarterly through Modelo 210.

If you’re a non-resident from outside the EU or EEA

• Flat rate: 24%.
• Unlike non-residents from the EU/EEA, you generally can’t deduct expenses before calculating the tax amount, the tax is charged on gross rental income. This rule was challenged in the European Court, which ruled that calculating the tax this way, without accounting for owners’ expenses, is unlawful. For now, however, expenses still can’t be applied, pending the outcome of all appeals. Specialists expect official changes to profit tax calculations to take effect from 2027, allowing expense deductions.

This is one of the more significant differences in the system, and it often catches people off guard if they aren’t warned about it beforehand, the practical gap between 19% on net income and 24% on gross can be substantial.

If you’re a resident

• Rental income is added to your overall income and taxed on Spain’s progressive scale: 19% up to €12,450, rising through several brackets up to 47% on income above €300,000 (the national scale for 2026, though some autonomous communities also apply their own regional scale).
• Deductible expenses are allowed, the same categories as for EU non-residents.
• If the property is rented as the tenant’s primary long-term home, an additional reduction of up to 60% on net rental income applies before tax, a genuinely significant benefit not available to non-residents. This reduction doesn’t apply to tourist or short-term rentals.

A note on tourist rentals specifically

Regardless of residency status, income from short-term tourist rentals is taxed the same way as other rental income, but only if the property is properly licensed:

• Costa Blanca: a license is required specifically for stays of up to 10 nights (full breakdown in article 6). For tourist rentals, reporting is done quarterly. IVA (Spain’s VAT) currently doesn’t apply unless daily cleaning, catering, or similar services are offered.
• Canary Islands: new tourist licenses have not been issued since December 2025, existing ones remain valid. In the Canary Islands, tourist rentals also pay IGIC at 7% (the Canary Islands’ equivalent of VAT). Reporting is quarterly.

Renting without a valid license, especially with increased enforcement in both regions, creates legal risks that go well beyond the question of taxes alone.

A worked example

A non-resident landlord from the EU earns €14,000 a year from long-term rental, with €4,000 in deductible expenses (community fees, insurance, IBI, management company commission):

• Taxable net income: €10,000.
• Tax at 19%: €1,900.

The same scenario for a non-resident landlord from outside the EU, deductions not permitted:

• Taxable income: the full €14,000.
• Tax at 24%: €3,360.

Almost double the tax on the same rental income, purely due to residency status, worth knowing in advance, before deciding how to structure and rent out the property.

The main takeaway

The tax gap between EU and non-EU non-residents is significant, and the deduction of up to 60% for residents on long-term rentals is one of the more valuable, and often underestimated, benefits of establishing residency if renting is part of your long-term plans. Getting proper advice on which category you fall into before you start renting saves considerable effort correcting mistakes later.