TAXES · EU VS NON-EU COUNTRIES
If you are not from the EU: why you pay more tax and cannot deduct expenses
By Moisés Vicens i FrancésJune 27, 20267 min read
The same house, the same rent, but a different tax bill depending on where you live. If you reside in the European Union or the European Economic Area, you pay less and can deduct expenses. If you live outside — and that includes the British after Brexit — the rate goes up and the deductions disappear. I explain why.
There is a question that surprises many foreign owners: "Do I pay the same wherever I live?". And the answer is no. The country where you reside changes — considerably — what you pay for your home in Spain. The difference lies in two things: the tax rate and the ability to deduct expenses.
Deducting expenses: only from the EU or the EEA
If you reside in the European Union or the European Economic Area (with information exchange), the law allows you to be taxed on the net income: that is, from the rent you receive you can deduct expenses such as community fees, the IBI, mortgage interest, repairs or insurance. That greatly lowers the base on which you pay. If you reside outside that area, you are taxed on the gross income, with nothing deducted. The same rent, but on a much larger base.
The rate: 24 % versus 19 %
On top of that difference comes the difference in the rate. The general IRNR rate is 24 %, but it drops to 19 % for residents in the EU or the EEA. So a non-EU resident faces a double penalty: they pay at a higher rate (24 % instead of 19 %) and, on top of that, on a larger base, because they cannot deduct expenses.
An important nuance about the sale
- The gain on the sale of the property is taxed at 19 % for all non-residents, whether they live in the EU or outside it.
- The jump from 24 % to 19 % affects income (rent and imputed income), not the gain on the sale.
- That is why it is worth not mixing them up: one thing is what you pay while you own the house, another is what you pay when you sell it.
The British case after Brexit
The clearest example is lived by the British. With Brexit, the United Kingdom ceased to be an EU State, so its residents went from being taxed as EU residents to being taxed as residents of a third country: from 19 % to 24 % and with no deduction of expenses. Many still file as they did before without realising. And here another piece comes into play that is worth reviewing: the double taxation treaty between Spain and your country, which may change the final result.
If you are a non-resident owner and you are not clear on how your country of residence affects you, write to me. I review your situation, calculate what applies to you depending on whether you reside in the EU or outside it, and look at the applicable double taxation treaty so that you neither pay too much nor declare too little.
Frequently asked questions
Do I pay the same wherever I live?
No. If you reside in the EU or the EEA, the IRNR rate on income is 19 % and you can deduct expenses. If you reside outside, the general rate rises to 24 % and no deductions are allowed. The same property pays differently depending on where you live.
I am British — does Brexit affect me for tax purposes?
Yes. After Brexit, residents in the United Kingdom are taxed as residents of a third country: at 24 % on income and with no deduction of expenses. It is worth reviewing your situation and the applicable double taxation treaty.
Can I deduct community fees and the IBI from the rent?
Only if you reside in the EU or the EEA. In that case you can deduct expenses such as community fees, the IBI, mortgage interest or repairs. From outside that area you are taxed on the gross income, with no deductions.
Is the gain on the sale also more expensive if I live outside the EU?
Not in terms of the rate: the gain on the sale of the property is taxed at 19 % for all non-residents. The difference between 24 % and 19 % affects income (rent and imputed income), not the gain on the sale.
Legal basis and official sources
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I calculate your IRNR according to your country of residence and review the double taxation treaty that applies to you.
Taxes for non-residents →Your tax residence affects what you pay: I take it into account from the moment of purchase.
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