1. Basic concepts and legal framework

Which taxes does a non-resident owning property in Spain pay?

At least four groups of taxes arise over the life cycle of the property:

(i) On acquisition: Transfer Tax and Stamp Duty (ITP-AJD) if the property is second-hand, or Value Added Tax (VAT) plus Stamp Duty (AJD) if it is a new home delivered by the developer.

(ii) During ownership: the annual Real Estate Tax (IBI); deemed income under Non-Resident Income Tax (IRNR) where the property is not let; Wealth Tax under limited liability if the assets in Spain exceed the exempt amount; and, where applicable, the Temporary Solidarity Tax on Large Fortunes (ITSGF), which only produces tax where the taxable base exceeds EUR 3,000,000 after the EUR 700,000 exempt amount (that is, with net assets in Spain above roughly EUR 3.7 million).

(iii) On disposal: IRNR on the capital gain; the 3 per cent withholding the buyer applies to a non-resident seller; and the municipal capital gains tax (IIVTNU).

(iv) On inheritance or gift: Inheritance and Gift Tax (ISD) under limited liability, payable on property located in Spain.

On top of this, where the non-resident lives in a State with which Spain has a double taxation treaty (DTT), the treaty’s allocation of taxing rights applies; for real estate it gives taxing rights to the State where the property is located (Spain), with the State of residence eliminating double taxation.

Which rules govern 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 (hereinafter, TRLIRNR), and its Regulations.

(ii) Wealth Tax: Law 19/1991, of 6 June, on Wealth Tax (LIP). ITSGF: article 3 of Law 38/2022, of 27 December.

(iii) ISD: Law 29/1987, of 18 December, on Inheritance and Gift Tax (LISD), and its Second Additional Provision, introduced by Law 26/2014 and amended by Law 11/2021, on non-residents’ access to regional rules.

(iv) ITP-AJD: Royal Legislative Decree 1/1993, of 24 September, approving the consolidated text of the ITP-AJD Act.

(v) VAT: Law 37/1992, of 28 December, on Value Added Tax.

To these must be added the regional rules on devolved taxes (ITP-AJD rates; Wealth Tax and ISD exempt amounts, scales and tax credits), municipal by-laws and the DTTs 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 (LIRPF): presence of more than 183 days, main centre or base of business activities or economic interests, and the family presumption. A Spanish national may be non-resident for tax purposes; a foreign national may be a Spanish tax resident. We have developed this in the Frequently asked questions about Spanish tax residence in this Spanish Tax Journal.

2. Acquiring the property

Which tax is paid on the purchase: ITP or VAT?

It depends on the type of property and the seller.

Second-hand home or transfer between individuals: ITP applies (onerous transfers). In common-regime territory, rates are set by each Autonomous Community and differ significantly: for example, Catalonia applies a 10 to 13 per cent scale and a 20 per cent rate where the buyer is a large holder or an entire residential building is acquired. There are reduced rates in certain cases (main home of young buyers, disability, large families) and increased rates in some Communities. The foral territories have their own regimes.

New home delivered by the developer: VAT at 10 per cent (4 per cent for special-regime or public-promotion officially protected housing), plus AJD at the rate set by the Autonomous Community.

Commercial premises, garages or separate storage rooms: on a first delivery by a business, VAT at 21 per cent plus AJD. Second and subsequent deliveries of buildings are VAT-exempt (art. 20.Uno.22 LIVA) and subject to ITP, unless, between businesses, the exemption is waived (art. 20.Dos LIVA). Deliveries of rural and non-buildable land are also VAT-exempt (art. 20.Uno.20 LIVA).

Is there withholding when buying from a non-resident?

Yes. Article 25.2 TRLIRNR requires the buyer to withhold and pay 3 per cent of the consideration where the seller is non-resident and does not act through a permanent establishment. The withholding is paid with Form 211 within one month of the transfer.

This withholding is a payment on account of the seller’s IRNR on the gain. If the seller made a loss or the final IRNR is lower than the amount withheld, the excess may be reclaimed with Form 210. We look at this in more detail in the section on disposal.

3. Formalities before the purchase

Is an NIE needed to buy?

Yes. The Foreigner Identity Number (NIE) is essential to execute the deed, open a bank account in the name of the non-resident buyer and appear as owner in the Land Registry and the Cadastre. It is issued by police stations in Spain and by Spanish consulates abroad. The time needed varies: at a consulate, weeks to months; in Spain, weeks with an appointment.

And a Spanish bank account?

It is not compulsory, but it is highly advisable. It allows (i) paying ITP-AJD, VAT and other taxes from Spain; (ii) paying IBI and community-of-owners charges; (iii) collecting rent if the property is let; and (iv) dealing with the lender, if there is a mortgage. Opening an account as a non-resident requires a non-resident certificate and, at many banks, evidence of the source of funds under anti-money-laundering legislation (Law 10/2010).

Are a notary and Land Registry registration mandatory?

A public deed before a Spanish notary is required for the transfer to be registrable in the Land Registry. Registration does not create ownership (ownership passes through the combination of title and delivery), but it protects the buyer against third parties (article 34 of the Mortgage Act, principle of public faith in the Registry) and is in practice essential for a later sale or financing.

4. Ownership by a non-resident

What annual IRNR arises on an urban property that is not let?

The so-called deemed income from real estate. Article 13.1.h) TRLIRNR, read with article 85 LIRPF, attributes annual income to a non-resident merely for owning an urban property that is neither used in a business activity nor let.

The base is calculated on the cadastral value:

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

(ii) 1.1 per cent of the cadastral value where it has been revised, modified or set through a general collective valuation procedure that came into force in the tax period or in the previous ten.

The IRNR rate without a permanent establishment applies to that base:

• 19 per cent for residents of another EU Member State, Iceland, Norway or Liechtenstein.
• 24 per cent for everyone else.

The return is filed with Form 210 during the calendar year following accrual (31 December). Each property is declared separately; in co-ownership, each co-owner declares his or her share.

If the property is let, what changes?

Deemed income is replaced by tax on the rental income. The return is still Form 210, but quarterly: within the first twenty calendar days of the month following the calendar quarter in which the income accrued.

The rate is the same (19 per cent for residents of the EU, Iceland, Norway or Liechtenstein; 24 per cent for the rest). The relevant difference is that residents of the EU, Iceland, Norway or Liechtenstein may deduct the expenses necessary to obtain the income (repairs, loan interest, IBI, community charges, depreciation, utilities paid by the owner), provided their direct link to the income is proven. Residents of other States are taxed on gross income, with no deduction of expenses.

Directive (EU) 2021/514 (DAC 7), transposed by Law 13/2023, requires digital platform operators to report to the Spanish Tax Agency (AEAT) (Form 238) the amounts paid to those carrying out certain activities, including the letting of real estate. The AEAT cross-checks that information against owners’ returns.

And IBI?

It is an annual municipal tax calculated on the cadastral value. It is paid by whoever owns the property on 1 January of each year. The rate is set by each municipality within the limits of the consolidated text of the Local Finance Act. The bill is paid by direct debit or as set out in the municipal by-law.

Is the non-resident subject to Wealth Tax?

Yes, under limited liability: on assets and rights located, exercisable or to be performed in Spain. Property located in Spain forms part of the base. The EUR 700,000 exempt amount also applies to taxpayers under limited liability (art. 28.Tres LIP), by statute.

The State Wealth Tax scale reaches 3.5 per cent. Non-residents may apply the rules of the Autonomous Community where the greatest value of their assets and rights in Spain is located (Fourth Additional Provision of the Wealth Tax Act, introduced by Law 26/2014 for EU and EEA residents and extended to all non-residents by Law 11/2021). The Communities apply their own rules, with different exempt amounts, scales and tax credits; Madrid maintains a 100 per cent tax credit.

So does the difference between Madrid and the other Communities also apply to non-residents?

Yes. Applying the rules of the Community where the greatest value of the assets and rights in Spain is located means, in practice, that a non-resident whose assets are concentrated in Madrid benefits from the Madrid tax credit; with assets concentrated in Barcelona or Mallorca, not. The regional credit does not, however, avoid the ITSGF, as explained below.

And the ITSGF?

The Temporary Solidarity Tax on Large Fortunes, regulated in article 3 of Law 38/2022, applies to non-residents under limited liability. There is an exempt amount of EUR 700,000 and the first EUR 3,000,000 of taxable base is taxed at 0 per cent, so the tax arises with net assets in Spain above roughly EUR 3.7 million. The scale reaches 3.5 per cent on the taxable base above EUR 10,695,996.06.

The ITSGF is a State tax. Only the Wealth Tax actually paid is deductible from it. Therefore, where Wealth Tax is subject to a regional credit (as in Madrid), the regional credit does not neutralise the ITSGF, which falls more heavily on assets located in those Communities.

Can a non-resident apply the joint cap on Income Tax and Wealth Tax?

Article 31.Uno LIP provides that the Wealth Tax liability, added to the Personal Income Tax liabilities, may not exceed 60 per cent of the sum of the taxable bases of the latter, with a maximum reduction of the Wealth Tax liability of 80 per cent. The wording of the provision refers to personal liability.

The Supreme Court, in judgments 1372/2025, of 29/10/2025 (appeal 4701/2023), and 1402/2025, of 03/11/2025 (appeal 7626/2023), held that residence does not justify the different treatment and recognised non-residents’ right to apply that cap. The Ministry of Finance has adapted the 2025 Wealth Tax return (Form 714) to that case law and has proposed doing so in the ITSGF return (Form 718).

5. Letting the property

How is rental income declared?

With Form 210, quarterly, within the first twenty calendar days of April, July, October and January, for income accrued in the previous calendar quarter. Several items of income from the same property may be grouped in the quarter.

Which expenses can an EU or EEA resident deduct?

Those necessary to obtain the income, in proportion to the period let. The most common:

(i) Interest on loans used to acquire or improve the property.

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

(iii) Repairs and maintenance; not improvements, which are depreciated.

(iv) Depreciation of the property: 3 per cent per year on the higher of (a) the acquisition cost paid or (b) the cadastral value, excluding the value of the land in both cases.

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

(vi) Fees for management, advice and administration.

(vii) Insurance on the property.

If the property is let for short periods (tourist rental) with services typical of the hotel industry (periodic cleaning during the stay, change of linen, reception), the activity may be characterised as a business activity. Depending on the means and organisation, there may or may not be a permanent establishment; IRNR also taxes business income obtained without a permanent establishment (art. 13.1.b TRLIRNR). It is an area of frequent audits.

And if the owner lives outside the EU and the EEA?

No expenses may be deducted. Gross income is taxed at 24 per cent. This structural asymmetry should be taken into account in significant portfolios.

6. Disposing of the property

How much IRNR is paid on the sale?

The capital gain (difference between the transfer value and the acquisition value, adjusted for related costs and taxes) is taxed at 19 per cent, whatever the seller’s State of residence: article 25.1.f).3.º TRLIRNR sets that rate for capital gains arising on transfers of assets. The 24 per cent rate applies to other income (for example, rent or deemed income of residents outside the EU and the EEA), not to this gain.

The acquisition value includes the price paid plus the costs and taxes of the purchase (ITP, non-recoverable VAT, AJD, notary, registry, fees). The transfer value is the price received less the seller’s costs and taxes on the sale.

How does the 3 per cent withholding work?

The buyer must withhold 3 per cent of the consideration and pay it with Form 211 within one month of the transfer. The withholding is a payment on account of the seller’s IRNR on the gain. The seller must file Form 210 within four months of the transfer to self-assess the IRNR:

• If the IRNR exceeds the withholding, the seller pays the difference.
• If it is lower, the seller reclaims the excess.
• If the transfer produces a loss, the seller reclaims the full amount withheld.

Is there a main-home reinvestment exemption?

Yes, but it depends on residence. The exemption was introduced by Law 26/2014 (Seventh Additional Provision TRLIRNR) for residents of the EU and of EEA States with an effective exchange of tax information. The property sold must have been the taxpayer’s main home and the proceeds must be reinvested in another main home on the terms of article 38 LIRPF. Residents of third countries cannot apply it.

And the municipal capital gains tax?

The seller is the taxpayer (art. 106.1.b of the consolidated text of the Local Finance Act, TRLRHL). If the seller is a non-resident individual, the buyer is the substitute taxpayer and must pay the tax (art. 106.2), which is normally reflected in the price or in an agreed withholding.

Following Constitutional Court judgment 182/2021, of 26/10/2021, and the reform made by Royal Decree-law 26/2021, the taxpayer may choose between the objective base (based on the cadastral value of the land and the years of ownership) and the actual base (effective gain). Where it is shown that there has been no increase in value, the tax does not apply (art. 104.5 TRLRHL).

7. Inheritance and gift: ISD under limited liability

How is the inheritance of a property located in Spain taxed where the heir is non-resident?

Through ISD under limited liability: the property located in Spain is taxed in Spain regardless of the heir’s residence. The tax base is the value of the property acquired; the tax is calculated with the State scale or, where applicable, the regional one.

Can the non-resident heir apply regional rules?

Yes. The Second Additional Provision (DA 2ª) of the LISD, introduced by Law 26/2014 following the CJEU judgment of 03/09/2014 (C-127/12) and extended by Law 11/2021 to all non-residents, provides that, if the deceased was resident in an Autonomous Community, the non-resident heir applies that Community’s rules (DA 2ª.Uno.1.b); if the deceased was not resident in Spain, those of the Community where the greatest value of the estate’s assets located in Spain is found (DA 2ª.Uno.1.a).

What about residents of third countries? Them too?

Yes. Since Law 11/2021, DA 2ª LISD applies to all non-residents, whether or not they live in the EU or the EEA. The Supreme Court had already recognised this for residents of third countries in its judgment 242/2018, of 19/02/2018, given in State liability proceedings (liability of the State as legislator), applying the free movement of capital (art. 63 TFEU). The other substantive requirements of the regional rules (kinship, retention of the asset, where applicable) must still be met.

Which regional rules apply to an inherited property?

Not necessarily those of the place where the property is located. If the deceased was resident in a Community, that Community’s rules apply; if the deceased was not resident in Spain, those of the Community where the greatest value of the estate’s assets in Spain is located. The Community where the property is located is decisive only for gifts of real estate.

And a gift of the property?

ISD under limited liability, with access to the rules of the Community where the property is located (DA 2ª.Uno.1.c LISD). Under the State rules, the filing deadline is 30 working days from the gift (compared with six months for a transfer on death).

8. Double taxation treaties

What does the DTT say about income from real estate?

Article 6 of the OECD Model Tax Convention, reflected in Spain’s DTTs, gives the State where the property is located the right to tax income from real estate. Spain therefore keeps the right to tax rent or deemed income from property located in its territory, regardless of the owner’s residence. The State of residence must, where appropriate, eliminate double taxation using the treaty method (exemption with progression or credit).

And the gain on sale?

Article 13.1 of the OECD Model allows the State where the property is located to tax gains on its transfer. Spain taxes the gain under IRNR without the DTT preventing it. Again, the State of residence must eliminate double taxation.

And wealth?

Article 22 of the OECD Model allows the State where the property is located to tax real estate wealth. Spain applies Wealth Tax under limited liability to non-residents owning property in Spain, and the DTT does not prevent it. Other assets may be taxable only in the State of residence (for example, art. 22.4 of the DTT with Switzerland, applied by the Directorate-General for Taxes (DGT) in ruling V-1648-26, of 18/06/2026).

The real-estate-rich company clause: article 13.4 of the OECD Model.

It is an often overlooked point. Article 13.4 of the OECD Model (2017 version) allows the State where the property is located to tax gains on the transfer of shares or comparable interests deriving more than 50 per cent of their value, directly or indirectly, from real estate located in that State at any time during the 365 days preceding the transfer. The clause appears, in various wordings, in many of the DTTs signed by Spain. Under domestic law, article 13.1.i).3.º TRLIRNR taxes gains on the transfer of interests in entities whose assets consist mainly, directly or indirectly, of real estate located in Spain.

The practical consequence is that interposing a company to hold the property does not necessarily exclude Spain’s right to tax the gain on the transfer of the interests. A corporate structure without substance or valid economic reasons is not in itself a solution.

9. Structures for holding the investment

Direct ownership by an individual: advantages and drawbacks?

Advantages: simplicity; low initial cost; 19 per cent rate on income (EU and EEA residents) and on gains; access to the main-home reinvestment exemption (EU and EEA residents).

Drawbacks: tax on gross income, with no deduction of expenses, for residents outside the EU and the EEA; direct exposure to Wealth Tax under limited liability (with a EUR 700,000 exempt amount) and, where applicable, to the ITSGF; no possibility of deferring tax on income, which is taxed directly in the owner’s hands.

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

Advantages: deduction of expenses (including depreciation and financial expenses, within the statutory limits); income taxed in the company until distributed; offset of tax losses; intra-group financing possible.

Drawbacks: Corporate Income Tax at 25 per cent on profits; economic double taxation on dividend distributions (subject to the article 14 TRLIRNR exemption for EU parent companies with a qualifying holding); more demanding accounting, registry and formal obligations; if the company is an asset-holding entity (more than half of its assets not used in a business activity, art. 5.2 of Law 27/2014 on Corporate Income Tax, LIS), it loses certain tax benefits.

Foreign company holding the property: what should be considered?

Three points:

(i) Economic substance: the AEAT targets interpositions without real substance (effective management, staff, documented activity). Articles 15 (conflict in the application of tax rules) and 16 (sham transactions) of Law 58/2003, the General Tax Law, are the usual tools.

(ii) The DTT real-estate-rich company clause: if more than 50 per cent of the value of the interests derives from Spanish real estate, their transfer may be taxed in Spain regardless of the seller’s residence (art. 13.4 OECD Model and art. 13.1.i).3.º TRLIRNR).

(iii) Wealth Tax on the interests: under article 5.Uno.b) LIP, securities representing an interest in the equity of any entity, not traded on organised markets, whose assets consist of at least 50 per cent of real estate located in Spain are deemed located in Spain. The non-resident is taxed on them under limited liability, unless the applicable DTT gives taxing rights over that wealth only to the State of residence.

SOCIMI: when does it make sense?

The listed real estate investment company (SOCIMI), regulated by Law 11/2009, has a specific regime (art. 9): 0 per cent Corporate Income Tax rate; a 19 per cent special levy on dividends distributed to shareholders holding 5 per cent or more who are exempt or taxed at less than 10 per cent; and a 15 per cent special levy on undistributed profits deriving from income not taxed at the general rate.

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

10. Special cases

Tourist rental

Three issues meet in tourist rentals.

IRNR: if services typical of the hotel industry are provided (periodic cleaning during the stay, change of linen, reception, laundry), the income may be characterised as business income; depending on the means and organisation, there may or may not be a permanent establishment. If only maintenance and cleaning between stays are provided, it remains income from real estate capital.

VAT: letting a home without supplementary services typical of the hotel industry is VAT-exempt (art. 20.Uno.23 LIVA). With hotel services, it is subject to and not exempt from VAT, at 10 per cent, and the owner must register as a business or professional.

Regional and municipal rules: most Communities and large municipalities have specific regulations (licences, registers, maximum periods) on top of the tax rules.

Gibraltar: residence of Spanish nationals and the list of non-cooperative jurisdictions

The International Agreement on taxation and the protection of financial interests between the Kingdom of Spain and the United Kingdom in respect of Gibraltar, signed on 04/03/2019 and in force since 04/03/2021 (BOE-A-2021-3947), provides that Spanish nationals who move their residence to Gibraltar after its signature are treated as tax resident exclusively in Spain (V-1310-22, of 09/06/2022). For legal entities, it draws certain Gibraltar entities with qualifying links to Spain into Spanish residence.

Gibraltar was removed from the list of non-cooperative jurisdictions by Order HAC/649/2026, of 21 June, with effect for tax periods beginning on or after 28/06/2026. Ruling V-1310-22 still described it as a tax haven, in line with the list in force in 2022.

Property in a Community with a Wealth Tax credit

The choice between Madrid and other Communities may have a material impact on Wealth Tax under limited liability. The combination of CJEU judgment C-127/12 and the Fourth Additional Provision of the Wealth Tax Act allows the rules of the Community where the greatest value of the assets in Spain is located to be applied: if most of the property is in Madrid, the credit applies; if it is outside Madrid, it does not.

The ITSGF, as we have seen, largely offsets the Madrid credit for net assets above roughly EUR 3.7 million, so regional planning loses part of its appeal.

Intra-group loan for the acquisition

Intra-group financing (the parent company or a group finance entity lends to the buyer of the property) is possible. The critical points are the limitation on financial expenses in article 16 LIS (30 per cent of operating profit, with a EUR 1 million threshold, transposing the ATAD), the arm’s length principle of article 18 LIS (related-party transactions) and, where applicable, withholding on interest paid to a non-resident lender where no domestic or treaty exemption applies.

Rental platforms and DAC 7

Since 2024, digital platform operators have reported to the AEAT, on Form 238, the amounts paid for the letting of real estate, among other activities. The AEAT cross-checks that information against the non-resident owner’s Form 210, so correct quarterly filing, with or without deduction of expenses depending on residence, is essential.

Non-resident property taxation combines several taxes (IRNR, Wealth Tax, ITSGF, ITP-AJD or VAT, ISD and local taxes) over the whole life cycle of the property. The above is a general map, not an opinion: the right structure depends to a large extent on the State of residence and the expected holding period.

For the general treatment of tax-residence conflicts and non-resident status, see the Frequently asked questions about Spanish tax residence. For the Beckham regime for those moving to Spain, the Frequently asked questions about the Beckham Law. For the exit tax on leaving Spain with a portfolio of holdings, 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).
• Law 19/1991, of 6 June, on Wealth Tax (LIP), including the Fourth Additional Provision.
• Law 38/2022, of 27 December (art. 3, ITSGF).
• Law 29/1987, of 18 December, on Inheritance and Gift Tax (LISD), including the Second Additional Provision.
• Royal Legislative Decree 1/1993, of 24 September (ITP-AJD).
• Law 37/1992, of 28 December, on VAT.
• Royal Legislative Decree 2/2004, of 5 March (TRLRHL), arts. 104 to 110.
• Law 11/2009, of 26 October, on SOCIMIs (art. 9).
• International Agreement between Spain and the United Kingdom in respect of Gibraltar, of 04/03/2019 (BOE-A-2021-3947).
• Order HAC/649/2026, of 21 June, amending Order HFP/115/2023 on non-cooperative jurisdictions (BOE-A-2026-13946).

Case law

• CJEU, judgment of 03/09/2014, Case C-127/12, Commission v Spain (ISD and free movement of capital): link
• Constitutional Court, Plenary, judgment 182/2021, of 26/10/2021 (municipal capital gains tax): link
• Supreme Court, Third Chamber, Fifth Section, judgment 242/2018, of 19/02/2018 (appeal 62/2017, ECLI:ES:TS:2018:550), on ISD for residents of third countries: www.poderjudicial.es.
• Supreme Court, Third Chamber, Second Section, judgment 1372/2025, of 29/10/2025 (appeal 4701/2023, ECLI:ES:TS:2025:4849): www.poderjudicial.es; and judgment 1402/2025, of 03/11/2025 (appeal 7626/2023, ECLI:ES:TS:2025:4846): www.poderjudicial.es; on the art. 31 LIP joint cap for non-residents.

Administrative doctrine

• DGT, Binding ruling V-1310-22, of 09/06/2022 (Spanish national moving residence to Gibraltar: tax residence in Spain under the 2019 Agreement): link
• DGT, Binding ruling V-1648-26, of 18/06/2026 (art. 22.4 of the DTT with Switzerland and interests in a Spanish entity): link