Spain Changes Non-Resident Tax Law

The Court of Justice of the European Union formally requested that Spain amend their income tax rules on how non-Spanish residents were taxed on their Spanish income.

Under the previous tax rules non-residents were at a major disadvantage from their Spanish resident counter-parts as they were taxed on their gross income with no deductions allowed.

This will certainly come as good news to anyone in the Spanish buy-to-let market who would have had significant Spanish tax liabilities in the past. Spanish income tax was payable at 24% of the gross income with no deductions allowed to reduce the taxable figure.

The expenses which can be deducted are similar to those allowable for Spanish residents and must be directly related to the sources of income generated in Spain.