Double taxation and Spanish property: what owners living abroad pay

The basic principle: property is taxed where it is located

Under the treaties, Spain may tax income from real estate located in Spain: rents, the imputed income from own use and gains on a sale. The country of residence then takes this income into account by the credit or exemption method, depending on the treaty and the income. The 2011 Spain–Germany treaty changed several rules compared with the old one, so an individual review makes sense.

Own use: tax without rental income

Many owners are surprised: even if the property is only used by them, non-residents must file an annual Spanish return (Form 210). Tax is due on an imputed income of 1.1% or 2% of the cadastral value, at 19% for EU residents. See non-resident taxes and Form 210.

Rentals

Rental income from Spain is taxed in Spain. EU residents can deduct expenses directly linked to the letting (IBI, community fees, insurance, depreciation, interest) and pay 19% on the net income. In the country of residence the income usually has to be declared as well, with Spanish tax taken into account under the treaty.

Sale

Non-residents pay 19% on the capital gain in Spain, and the buyer withholds 3% of the price as a payment on account. In the country of residence the gain may also be relevant, depending on the holding period and the treaty. See selling as a non-resident.

Wealth tax

Spain levies wealth tax on non-residents only on Spanish assets, with allowances, plus a solidarity tax on large fortunes since 2023. For most holiday homes it is not an issue; for high-value properties it can be.

When do you become Spanish tax resident?

If you spend more than 183 days a year in Spain or your centre of interests is here, you may become fully taxable in Spain on your worldwide income. See the 183-day rule.

Common mistakes and reporting duties

• No annual return for a property used only by the owner.
• Rental income declared only in the country of residence.
• Purchase costs and improvements not documented, which matters on a sale.
• Buying through a foreign company without a tax review.

Missed returns lead to surcharges in both countries and can cause problems when selling. Our tax lawyers file the Spanish returns and coordinate with your adviser at home.

Castell.law is the English and German-speaking practice of Castell Abogados, a law firm in Palma de Mallorca. This page is general information, not advice on a specific case: laws and procedures change, so check your situation with us before acting.