The questions that follow are the ones that come up most often in conversations with non-residents considering the purchase of property in Spain, with those who already own one and wonder how it is taxed, and with those who are selling, letting or passing it on by way of inheritance. I have grouped them by topic. Each answer is deliberately brief; where a nuance warrants longer treatment, I link to the technical analysis elsewhere in this Spanish Tax Journal.

1. Basic concepts and regulatory framework

What taxes does a non-resident pay on a property in Spain?

At minimum, four tax lines run across the property’s life cycle:

(i) On acquisition: Transfer Tax and Stamp Duty (ITP-AJD) for second-hand property; Value Added Tax (VAT) plus Stamp Duty (AJD) for new build sold by a developer; and the municipal capital gains tax (IIVTNU) generally borne by the seller.

(ii) On ownership: the municipal real-estate tax (IBI) annually; deemed rental income under the Non-Resident Income Tax (IRNR) where the property is not let; Wealth Tax (IP) by real obligation where the Spanish-situs wealth exceeds the exempt threshold; and, where applicable, the Temporary Solidarity Tax on Large Wealth (ITSGF) when Spanish-situs assets exceed EUR 3,000,000.

(iii) On disposal: IRNR on the capital gain; the 3 per cent withholding the buyer applies to the non-resident seller; and the municipal capital gains tax (now borne by the seller, unless agreed otherwise).

(iv) On inheritance or gift: Inheritance and Gift Tax (ISD) by real obligation, levied on the property situated in Spain.

To this is added, where the non-resident resides in a State with a double-tax treaty (DTT), the treaty allocation of taxing rights, which on property tends to attribute taxation to the State where the property is located (Spain).

What are the rules governing the matter?

Five blocks of legislation:

(i) IRNR: Royal Legislative Decree 5/2004, of 5 March, approving the Consolidated Text of the Non-Resident Income Tax Act (TRLIRNR), and its Regulation.

(ii) IP and ITSGF: Act 19/1991, of 6 June, on Wealth Tax (LIP), amended by Act 38/2022 introducing the ITSGF; the ITSGF has been successively extended and reshaped.

(iii) ISD: Act 29/1987, of 18 December, on Inheritance and Gift Tax (LISD), and its second additional provision inserted by Act 26/2014 on access to autonomous-community legislation.

(iv) ITP-AJD: Royal Legislative Decree 1/1993, of 24 September.

(v) VAT: Act 37/1992, of 28 December.

To this are added the autonomous-community rules for ceded taxes —ITP-AJD rates, IP and ISD reliefs— and the respective double-taxation treaties signed by Spain.

Are “non-resident” and “foreigner” the same?

No. Non-resident status is determined by applying the criteria of article 9 of the Personal Income Tax Act —stay exceeding 183 days, centre of economic interests, family presumption—. A Spanish national may be a non-resident for tax purposes; a foreign national may be a Spanish tax resident. I have developed this in the Frequently asked questions about Spanish tax residence in this Spanish Tax Journal.

2. Acquisition of the property

Which tax applies on purchase: ITP or VAT?

It depends on the type of property and the seller.

Second-hand property or sale between private individuals: ITP applies (Transfer Tax). The rate is set by each Autonomous Community; it ranges from 6 to 11 per cent depending on the region, the property value and, in some cases, the buyer’s profile (young, disabled, large family).

New build delivered by the developer: VAT at 10 per cent (4 per cent for specially protected housing), plus Stamp Duty (AJD), which each Autonomous Community normally sets between 0.5 and 2 per cent.

Commercial premises, land, garage or storage room independent of the dwelling: VAT at 21 per cent plus AJD if the seller is a business or professional; ITP under the regional rules otherwise.

Is there a withholding when buying from a non-resident?

Yes. Article 25.2 TRLIRNR obliges the buyer to withhold and remit 3 per cent of the purchase price when the seller is a non-resident not acting through a permanent establishment. The withholding is remitted using Form 211 within one month from the date of transfer.

The withholding operates as an advance payment of the seller’s IRNR on the capital gain. If the seller has a loss or the final IRNR is below the 3 per cent withheld, the seller can claim a refund of the excess by Form 210. We come back to this in the disposal block.

Who pays the municipal capital gains tax (plusvalía)?

By statute, the seller (article 106 of the Local Tax Act, Royal Legislative Decree 2/2004). If the seller is a non-resident, the buyer is subsidiarily liable: in practice, notaries and registrars require evidence of payment before deeds are granted or registered.

After Constitutional Court judgment 182/2021, of 26/10/2021, and the reform under Royal Decree-Law 26/2021, the taxpayer can choose between the objective base —based on cadastral land value and years of ownership— and the real base (effective gain). Where there is no gain, there is no taxable event.

3. Pre-purchase formalities

Do I need a NIE to buy?

Yes. The Foreigner Identification Number (NIE) is indispensable to grant the deed, open a bank account in the non-resident buyer’s name, and appear as owner on the Land Registry and Cadastre. It is issued by the Spanish Police in Spain or by Spanish Consulates abroad. Processing times vary: at consulate level, weeks or months; in Spain, weeks with prior appointment.

And a Spanish bank account?

Not strictly required but strongly recommended. It allows (i) payment of ITP-AJD, VAT and other taxes from Spain; (ii) management of IBI bills and community-of-owners charges; (iii) collection or payment of rent if the property is to be exploited; and (iv) provision of any guarantees the lending bank may require on the mortgage loan. Opening as a non-resident requires a non-residence certificate and, at many banks, verification of the source of funds for anti-money-laundering purposes (Act 10/2010).

Is the notary and Land Registry mandatory?

For the property itself, yes. The public deed before a Spanish notary is needed for the transfer to be registrable at the Land Registry. Registration is not constitutive of the ownership right —ownership is transferred by the combination of title (contract) and modus (handover)— but it does protect the buyer against third parties (article 34 of the Mortgage Act, principle of registry good faith) and is indispensable for subsequent dealing or financing.

4. Ownership of the property by a non-resident

What annual IRNR does owning an urban property generate if not rented out?

The so-called deemed rental income. Article 13.1.h) TRLIRNR attributes to the non-resident, by the mere ownership of urban property not used in business and not rented out, an annual deemed income.

The base is computed on the cadastral value:

(i) 2 per cent of the cadastral value, as the general rule.

(ii) 1.1 per cent of the cadastral value where the cadastre has been revised, modified or determined through a general collective valuation procedure in the previous ten years.

The IRNR rate applies on that base:

  • 19 per cent for residents in another EU State, Iceland, Norway or Liechtenstein.
  • 24 per cent for residents in third countries.

Filing is by Form 210 within the calendar year following the accrual date (31 December). Each property is filed separately; in co-ownership, each owner files his or her share.

What changes if I rent the property out?

Deemed income is replaced by taxation of rental income. Filing is still through Form 210, but on a quarterly basis: by the 20th of the month following the calendar quarter in which the income was accrued.

The rate is the same (19 per cent EU/EEA, 24 per cent rest). One operationally important difference: a resident in the EU, Iceland, Norway or Liechtenstein can deduct expenses necessary for the obtention of the income —repairs, the apportioned share of mortgage interest, IBI, community-of-owners fees, depreciation, utilities if paid by the owner— provided their direct link to the income is established. A non-EU/EEA resident is taxed on the gross income, with no deduction. This is an asymmetry that makes the choice of residence jurisdiction material.

From 2024, Directive (EU) 2021/514 DAC 7, transposed by Act 13/2023, is fully operational: real-estate intermediation platforms (Airbnb, Booking, Vrbo) report rental income paid to hosts to the AEAT automatically. The cross-reference with the non-resident’s Form 210 is now structural.

And the IBI?

A municipal annual tax, computed on the cadastral value. Paid by whoever owns the property as at 1 January of each year. The rate is set by each town hall within statutory limits. For urban property it typically ranges from 0.4 to 1.3 per cent of the cadastral value. The bill is direct-debited or paid by self-assessment according to the municipal ordinance.

Does the non-resident pay Wealth Tax?

Yes, by real obligation: on assets and rights located or exercisable in Spanish territory. Property situated in Spain falls squarely within the base. The exempt minimum for the non-resident under real obligation is EUR 700,000 (article 28 LIP), in line with the resident’s, after the equalisation operated by the European case law.

The State IP scale climbs progressively to 3.5 per cent. Each Autonomous Community has its own legislative capacity: Madrid keeps a 100 per cent rebate, while Catalonia, Valencia, the Balearic Islands and others keep the scale fully exigible. After CJEU judgment C-127/12, of 03/09/2014, and the subsequent Spanish Supreme Court doctrine, EU/EEA non-residents may elect the autonomous-community legislation where the largest portion of their Spanish-situs assets is located. Supreme Court judgment 242/2018, of 19/02/2018, extended this right to residents of third countries, under the principle of free movement of capital (art. 63 TFEU).

So does the Madrid vs. rest divergence also apply to non-residents?

Operationally, yes. The choice of the connecting point —the Autonomous Community where the largest share of the Spanish-situs property portfolio is located— enables access to the more favourable autonomous regulation. In practice, a non-resident with a property portfolio concentrated in Madrid benefits from the rebate; with a portfolio concentrated in Barcelona or Mallorca, does not.

And the ITSGF?

The Temporary Solidarity Tax on Large Wealth, introduced by Act 38/2022 and successively extended, reaches the non-resident by real obligation when the value of his or her assets and rights in Spain exceeds EUR 3,000,000. The scale climbs to 3.5 per cent on the base exceeding EUR 10,695,996.06.

The ITSGF integrates with the IP: the autonomous IP liability is deducted from the ITSGF liability, neutralising the effect for residents in Autonomous Communities with exigible IP. The consequence is that, in practice, the ITSGF bites harder on taxpayers in Madrid and other Autonomous Communities with rebated IP.

Can the non-resident apply the joint IRPF-IP cap?

Yes, after the recent consolidation. The Supreme Court, in judgments 1372/2025, of 29/10/2025, and 1402/2025, of 03/11/2025, has recognised non-residents the right to apply the joint IRPF-IP cap of article 31 LIP. It is a relevant shift for non-residents with significant Spanish property wealth, since it caps the IP liability when income plus wealth exceed the 60 per cent statutory threshold.

5. Letting the property

How do I declare rental income?

Form 210, quarterly, within the first twenty natural days of April, July, October and January, for income accrued in the preceding calendar quarter. Aggregated filing of several lettings per quarter is permitted.

What expenses can I deduct as an EU/EEA resident?

Those necessary for obtaining the income, in proportion to the let period. The most common items:

(i) Mortgage interest on borrowing used for acquisition or improvement.

(ii) IBI, municipal levies and community-of-owners fees.

(iii) Repairs and maintenance of the property; not structural improvements, which are depreciated.

(iv) Depreciation of the property: 3 per cent annually on the higher of (a) acquisition cost excluding land or (b) cadastral building value excluding land.

(v) Utilities —water, electricity, gas— if paid by the owner.

(vi) Fees of the property manager, lawyer, tax adviser and any management agencies.

(vii) Insurance on the property.

If the EU/EEA resident lets the property on a short-term basis (tourist rental) with hotel-type services —daily cleaning, towel and linen changes during the stay, reception— the activity may be recharacterised as business income under IRNR, with permanent-establishment taxation and additional accounting and reporting obligations. It is an inspection-friction zone.

And if the owner resides outside the EU/EEA?

No expense deduction. Taxation on the gross income at 24 per cent. The asymmetry is structural and, for significant portfolios, frequently justifies planning the residence jurisdiction itself.

6. Disposal of the property

How much IRNR do I pay if I sell?

The capital gain —difference between the transfer value and the acquisition value, adjusted for inherent expenses and taxes— is taxed at:

  • 19 per cent if the seller resides in the EU, Iceland, Norway or Liechtenstein.

  • 24 per cent if the seller resides outside the EU/EEA.

The acquisition value includes the price actually paid plus the expenses and taxes inherent to the purchase —ITP, non-recovered VAT, AJD, notary, registry, fees—. The transfer value is the price actually received less expenses and taxes borne by the seller on sale.

How does the 3 per cent withholding work?

The buyer must withhold 3 per cent of the total price and remit it to the AEAT by Form 211 within one month of the date of transfer. This withholding is an advance payment of the seller’s IRNR on the gain. The seller must file Form 210 within four months of the transfer to self-assess his or her effective IRNR:

  • If the IRNR is higher than the 3 per cent withheld, the seller remits the difference.
  • If the IRNR is lower, the seller claims a refund of the excess withheld.
  • If the transfer generates a loss —less frequent— the seller claims a full refund of the 3 per cent withheld.

Is there a reinvestment relief in primary residence?

Yes, but conditioned on residence. The seventh additional provision of the TRLIRNR extends to EU/EEA residents the primary-residence reinvestment relief in article 38 LIRPF for Spanish residents. The condition is that the property sold qualified as primary residence and that the proceeds are reinvested in another primary residence within two years.

The extension to EU/EEA residents was introduced by Act 26/2014 after CJEU C-127/12, in line with the equalisation operated in other taxes. Residents of third countries do not access the relief.

And the municipal capital gains tax (plusvalía)?

Paid by the seller. After Constitutional Court 182/2021 and Royal Decree-Law 26/2021, the taxpayer can choose between the objective base and the real base (effective gain). When the transfer is at a loss or with no property gain, there is no taxable event.

7. Inheritance and gift: ISD by real obligation

How is the inheritance of a Spanish-situs property taxed when the heir is non-resident?

Through ISD by real obligation: the property situated in Spain is taxed in Spain regardless of the heir’s residence. The taxable base is the value of the asset transferred; the liability is computed by applying the State scale or, where applicable, the autonomous one.

Can the non-resident heir apply the autonomous-community rebate?

Yes, after the consolidation of the CJEU doctrine. CJEU C-127/12, of 03/09/2014 declared contrary to article 63 of the Treaty on the Functioning of the European Union (free movement of capital) the Spanish legislation denying EU/EEA non-residents access to the autonomous-community rebates of the ISD applicable to residents. STS 242/2018, of 19/02/2018, extended the equalisation to residents of third countries, under the same free movement of capital, which has erga omnes effect.

The second additional provision of the LISD, inserted by Act 26/2014, articulates the equalisation: the EU/EEA non-resident accesses the autonomous-community legislation where the largest value of the assets and rights triggering the accrual is located. For property, that is the Autonomous Community where the property is located.

And residents of third countries? Them too?

Yes, after STS 242/2018. The judgment reasons that the free movement of capital under article 63 TFEU is not limited to relations among Member States and therefore applies also vis-à-vis third countries. The AEAT has been admitting access to the more favourable autonomous-community legislation also for heirs resident in non-EU/EEA jurisdictions, without prejudice to the other material requirements (kinship, value, asset-retention where applicable).

Which Autonomous Community’s law applies to a property?

The one where the property is located. If the inheritance comprises several properties in different Autonomous Communities, the law of the Community where the largest value of Spanish-situs assets is located applies.

And the gift of property?

Same regime: ISD by real obligation, access to the autonomous-community legislation where the property is located. The filing deadline is 30 working days from the granting of the deed (against 6 months for mortis causa transfers).

8. Double Taxation Treaty

What does the DTT say about rental income?

Article 6 of the OECD Model Convention —transposed in every Spanish bilateral DTT— allocates to the State of situation the right to tax rental income. Spain therefore retains the right to tax rent or deemed rental income on property situated in its territory, regardless of the owner’s residence. The State of residence, where applicable, must eliminate double taxation under the method of the Convention (exemption with progression or ordinary credit).

And the capital gain on sale?

Article 13.1 of the OECD Model Convention allocates to the State of situation the right to tax capital gains on property transfers. Spain accordingly taxes IRNR without the DTT precluding it. The State of residence must again eliminate double taxation.

And wealth?

Article 22 of the OECD Model Convention allocates to the State of situation the right to tax property wealth. Spain applies IP under real obligation to the non-resident with Spanish-situs property, without the DTT precluding the tax.

The real-estate-rich company clause: article 13.4 OECD MC.

A frequently overlooked point in planning. Article 13.4 OECD MC permits the State where the property is situated to tax capital gains on the transfer of shares or interests in a company whose assets consist, directly or indirectly, of more than 50 per cent in property situated in that State. The clause is incorporated in much of Spain’s modern DTT network.

The operational impact is significant: interposing a company to hold a property does not necessarily exclude Spain’s right to tax the capital gain on the transfer of the company’s shares. A pure corporate structure, without substance or sound business motives, is not by itself a solution.

9. Structures for routing property investment

Individual direct ownership: pros and cons.

Pros: operational simplicity; low entry cost; 19 per cent (EU/EEA) rate on income and gains; full access to TRLIRNR exemptions and reliefs.

Cons: full taxation of income without expense deduction if the owner resides outside the EU/EEA; direct IP exposure under real obligation (with EUR 700,000 exempt minimum); municipal capital gains tax on the seller; no intra-vehicle deferral.

Spanish company (SL) held by non-resident: when does it make sense?

Pros: broad expense deduction (including depreciation and financing); deferral of capital-gain taxation at the company level; ability to offset tax losses; intra-group financing available.

Cons: Corporate Income Tax at 25 per cent on profits; economic double taxation on dividend distribution (with the qualification of the article 14 TRLIRNR exemption where the parent is an EU entity with a qualified holding); more demanding accounting, registry and reporting obligations; if the company is classified as a patrimonial entity (more than 50 per cent of assets non-affected, art. 5.2 LIS), it loses certain tax benefits and becomes subject to anti-avoidance rules.

Foreign company holding the property: what to watch out for?

Three focuses:

(i) Economic substance: the AEAT has been intense on substance-poor interposition. The mechanisms of article 15 LGT (conflict in the application of the rule) and article 16 LGT (simulation) are the usual levers.

(ii) Real-estate-rich company clause in the DTT: if the company’s assets consist of more than 50 per cent in Spanish property, the transfer of its shares may be taxed in Spain regardless of the transferor’s residence (art. 13.4 OECD MC).

(iii) IP on the shares: a non-resident who holds shares in a company whose assets are more than 50 per cent in Spanish property falls, under article 5.Uno.b) LIP, within the real-obligation scope. It is a specific anti-interposition rule.

SOCIMI: when does it make sense?

The Spanish Real Estate Investment Trust (SOCIMI), regulated by Act 11/2009, offers a specific regime: 0 per cent Corporate Income Tax, dividend exemption at the shareholder level subject to certain conditions, and a special 15 per cent tax on undistributed profits where holders with more than 5 per cent ownership are taxed at 10 per cent or less in their State of residence.

The regime makes sense for property portfolios of certain scale (minimum EUR 5,000,000 share capital, listing on a regulated market or multilateral trading facility), with prolonged holding horizon and systematic dividend distribution to investors. It is not a vehicle of choice for a single residential property.

10. Special cases

Tourist rental

Three issues converge on the tourist rental.

IRNR: if the activity includes hotel-type services —daily cleaning during the stay, towel and linen changes during the stay, reception, in-house laundry— it is recharacterised as business income, with permanent-establishment taxation and additional accounting and reporting obligations. If only basic maintenance and between-stay cleaning services are provided, it retains the character of property income.

VAT: residential leasing with or without ancillary services follows distinct rules. Pure residential leasing is VAT-exempt (article 20.Uno.23 LIVA). Residential leasing with hotel services is subject and not exempt, at 10 per cent, and the owner must register on the businesses and professionals census.

Autonomous and municipal rules: most Autonomous Communities and large city councils have developed specific tourist-rental regulation (licences, registries, maximum periods), which overlays the tax rules.

Property in Gibraltar

The International Agreement Spain-United Kingdom on Gibraltar, signed on 04/03/2019 and in force from 04/03/2021 (BOE of 13/03/2021, ref. BOE-A-2021-3947), sets specific rules that pull tax residence in Spain for individuals and legal persons with qualified ties to Gibraltar. For legal persons, Gibraltarian companies with majority of assets, income, owners or directors in Spain are pulled to Spanish residence. The DGT, in binding consultation V-1310-22, has confirmed that the Agreement does not alter Gibraltar’s status as a tax haven for domestic purposes.

Property in an Autonomous Community with rebated IP

The choice between Madrid and Catalonia, Valencia or the Balearic Islands can have material impact on the IP liability of the non-resident under real obligation. The structure of C-127/12 + STS 242/2018 + 2nd AP LISD enables access to the more favourable autonomous-community legislation: in practice, if the bulk of the property portfolio is located in Madrid, the rebate applies; if outside Madrid, it does not.

The ITSGF, as we saw, partially neutralises the Madrid rebate, so for portfolios above EUR 3,000,000 the inter-Community planning loses some of its appeal.

Intra-group loan for acquisition

Intra-group financing (the parent company or a group financing vehicle lends to the acquirer of the property) is fully available and operationally efficient. The critical points: thin capitalisation and the arm’s-length principle of article 18 LIS (related-party transactions); the anti-erosion rules of the ATAD Directive —deductibility of finance costs capped by reference to operating profit—; and, where applicable, the withholding on interest paid to the non-resident lender, when no DTT exemption operates.

Short-term rental platforms and DAC 7

Since 2024, real-estate intermediation platforms —Airbnb, Booking, Vrbo, others— report rental income paid to hosts to the AEAT automatically, on Form 238. The cross-reference with the non-resident owner’s Form 210 is structural and no longer permits operational concealment. Correct quarterly filing of Form 210, with or without expense deduction depending on residence, is the only sustainable route.

Non-resident property taxation articulates five taxes —IRNR, IP, ITSGF, ITP-AJD or VAT, ISD— and projects across the property’s full life cycle. The above is a map, not an opinion. If you are planning the acquisition, ownership, disposal or inheritance of a property in Spain as a non-resident, get in touch before taking operational steps. The optimal structure depends, in large part, on your residence jurisdiction and the intended holding horizon.

For the general treatment of tax-residence conflicts and the non-resident status, see the Frequently asked questions about Spanish tax residence. For the Beckham regime applicable to those moving to Spain, see the Frequently asked questions about the Beckham Law. For the exit tax regime on leaving Spain with a portfolio of shares, see the Frequently asked questions about the exit tax.

Sources

Legislation

  • Royal Legislative Decree 5/2004, of 5 March, approving the Consolidated Text of the Non-Resident Income Tax Act (TRLIRNR).
  • Act 19/1991, of 6 June, on Wealth Tax (LIP).
  • Act 38/2022, of 27 December, ITSGF.
  • Act 29/1987, of 18 December, on Inheritance and Gift Tax (LISD).
  • Royal Legislative Decree 1/1993, of 24 September, ITP-AJD.
  • Act 37/1992, of 28 December, VAT.
  • International Agreement Spain-United Kingdom on Gibraltar, 04/03/2019, BOE of 13/03/2021 (BOE-A-2021-3947).

Key case law

  • CJEU, judgment of 03/09/2014, Case C-127/12 (free movement of capital applied to ISD): link
  • Spanish Supreme Court, judgment 242/2018, of 19/02/2018 (extension of C-127/12 to residents of third countries): link
  • Spanish Constitutional Court, judgment 182/2021, of 26/10/2021 (municipal capital gains tax): link
  • Spanish Supreme Court, judgments 1372/2025, of 29/10/2025, and 1402/2025, of 03/11/2025 (joint IRPF-IP cap applies to non-residents): link

Administrative doctrine

  • DGT, binding consultation V-1310-22 (Gibraltar as tax haven for domestic purposes despite the 2019 Agreement).
  • AEAT, instructions to Form 210 (non-resident income tax declaration without permanent establishment).