NRIT: How to Recover Overpaid Taxes on Rental Income from Real Estate in Spain

How is rental income currently taxed for non-residents?

In general, the NRIT (Non-Resident Income Tax) liability related to the rental income is equal to the gross rental income multiplied by the tax rate which is 24%. Then, the deduction of expenses linked to the rental activity is not allowed and reductions like the reduction of letting of dwellings a Spanish tax resident can benefit from cannot be applied either.

However, those having their tax residence in a member State of the European Union can deduct expenses and apply a lower tax rate equal to 19%. This rule is also applicable to those having their tax residence in a State belonging to the European Economic Area where an effective exchange of tax information exists (currently, Iceland, Norway and, as of July 11^th, 2021, Liechtenstein).

 

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Is this tax discrimination fair?

Despite the fact that there are several administrative pronouncements stating that those residing outside the Community cannot deduct any expense, the recent sentence from the National High Court of 28 July 2025 acknowledges that these taxpayers have the right to deduct expenses linked to the rental activity in Spain.

As for the tax rate and the reduction of letting of dwellings, it is expected that, relatively soon, sentences in favour of the taxpayer are passed, allowing all non-resident taxpayers to apply the 19% tax rate and the reduction of letting of dwellings. In fact, as far as the reduction of letting of dwellings is concerned, there is an active infringement case initiated by the European Commission.

How should non-resident landlords proceed?

Although it is true that the current situation is not clear altogether, especially regarding the tax rate and the reduction of letting of dwellings, it is advisable that the NRIT returns filed in the previous four years (prescriptive period) are amended and the request of the refund of undue payments is made.

In case of NRIT taxpayers recently renting properties in Spain, so none of the taxed periods is about to prescribe, waiting for some months until the legal context is clearer can be a good idea.

Quantifying the discrimination

Next, an example using approximate data from a real case is shared to quantify this discrimination in Euros.

An individual whose tax residence is outside the Community owns a dwelling located in Barcelona which is rented out. The annual gross income amounts to €16,000. A minimum deductible expense in relation to depreciation and council tax amounting to €3,500 per year is considered.

 

Traditional calculation
Income	Expenses	Net icome	Reduction	Tax base	Tax
16,000	–	16,000	–	16,000	3,840

 

Calculation with expenses deduction
Income	Expenses	Net income	Reduction	Tax base	Tax
16,000	3,500	12,500	–	12,500	3,000

 

Calculation with expenses deduction + lower tax rate + 60% reduction
Income	Expenses	Net income	Reduction	Tax base	Tax
16,000	3,500	12,500	7,500	5,000	950

 

Scenario 1

If only expense deductions are applied, the yearly refund would amount to €840 (€3,840 – €3,000) plus statutory late-payment interest.

Scenario 2

If, in addition, both the reduced tax rate and the reduction for residential lease are applied, the yearly refund would amount to €2,890 (€3,840 – €950) plus statutory late-payment interest.

Optimize your tax position and recover what is rightfully yours

Do not overpay NRIT on your rental income in Spain. At Adlanter, we help you request refunds of NRIT for the past four years and optimize the tax treatment of your future rentals. Contact us.