Home Investment

News and Articls

Income tax deductibility for non-residents renting property in Spain will be abolished if that option is adopted by the EU!

In response to claims that Spain has engaged in discrimination against expats who rent their homes, the European Commission has opened an infringement procedure against the country. In the current circumstances, non-EU residents in Spain are unable to take advantage of the 60% tax reduction on rental income when they are renting a residence due to the relevant conditions imposed by the Income Tax for Non-residents (Impuesto sobre la Renta de los No Residentes or IRNR). Spanish taxpayers claim to be cheated by the fact that the tax return for rental income in Spain is actually a benefit they receive. project qatar

The member of the law firm Ático Jurídico, José María Salcedo, has assured us that this is a distinction that makes no sense and is unfair between Spanish residents and non-residents living in the country: Resident residents of Spain who receive income from renting out property in Spain are given a better tax treatment than non-residents who receive the same income.

the treatment of each country differs, and this constitutes an obstacle to the free movement of capital in the EU (TFEU). Non-residents have found it more difficult to use tax loopholes because of the new rules set forth by the EU. An appeal to the European Court of Justice would be followed by penalties (ECJ).

The EU infringement procedure has three stages: identification, analysis, and resolution.

Only a letter of formal notice has been sent to Spain, giving it two months to reply to the infringement allegations. Europe is likely to send a reasoned opinion explaining why it believes Spanish law is in violation of EU law if Spain fails to provide a compelling response. Jose María Salcedo has mentioned that at that time, a formal request will be made for Spain to comply with EU Law, giving Spain a two-month window (normally) to report on the measures it has taken.

Brussels will likely file Spain before the ECJ in a legal trial if it decides to disregard this warning.

In the meantime, what should non-residents do?

He assures us that this process is set to open the doors for non-residents of Spain to request corrections of their self-assessments. "Additionally, prior to granting the right to request such rectification, the TEAC is concerned with granting tax reduction even if it was not included in their tax assessment at the time it was declared," states the lawyer, who notes that the TEAC criterion is to allow non-residents to request tax reduction even if it was not present in their tax assessment at the time it was announced. Non-residents of the EU are only allowed to claim these tax returns if the Hacienda Treasury has not started income verification checks that target declared income from the rental.

Go Back


Blog Search


There are currently no blog comments.