Own property or earn income in Spain as a non-resident? Here is what you owe

Non-resident income tax in Spain: an overview

The Impuesto sobre la Renta de No Residentes (IRNR) is the tax that applies to income generated in Spain by individuals who are not Spanish tax residents. It is administered separately from the regular income tax (IRPF) that applies to residents, and it operates on a per-income-event basis rather than annually: different types of income have different filing frequencies and deadlines.

The Modelo 210 is the universal form for IRNR declarations and is used for four main categories of income from Spain:

1. Rental income from Spanish property: Filed quarterly, calculated on either gross income (non-EU residents) or net income after deductible expenses (EU/EEA residents).

2. Imputed income on vacant property: Filed annually for the full year, calculated on the rateable value of the property regardless of whether it generates any actual income.

3. Capital gains from asset sales: Filed within three months of the date of completion (escritura de compraventa), covering gains from the sale of real estate, shares in Spanish companies, or other assets in Spain.

4. Passive income (dividends, interest, royalties): Filed as each payment is received, subject to any applicable double taxation treaty rates.

Why the 3% withholding on property sales matters

One of the most common surprises for non-resident property sellers in Spain is the mandatory 3% withholding. Under Spanish law, every buyer of Spanish real estate from a non-resident seller is legally obliged to withhold 3% of the agreed purchase price and pay it directly to the AEAT within one month of completion, using form Modelo 211. This is not negotiable and not optional.

From the seller’s perspective, this means you receive 3% less than the agreed price at completion. You then have three months to file your Modelo 210 for the capital gain and calculate the definitive IRNR liability. If the tax on your actual gain is less than the 3% withheld (which is common if the gain is modest relative to the sale price), you can claim a refund of the difference — a process that can take six to eighteen months.

This timeline needs to be factored into your financial planning for any Spanish property sale. BMC manages the entire process, from pre-sale gain calculation to refund claim, in coordination with our real estate law team.

Double taxation treaties: reducing your liability

Spain has double taxation treaties with more than 90 countries. Many of these treaties reduce the withholding rates on dividends, interest, and royalties below the standard IRNR rates. Some treaties also affect the taxing rights over capital gains from real estate, though Spain generally retains taxing rights over gains from Spanish property regardless of treaty provisions.

To benefit from treaty rates, you must apply for the treaty treatment — it is not applied automatically. We manage these treaty claims as part of our non-resident tax service and coordinate with our VAT representation service for clients who also have Spanish VAT obligations.