Rental Income in Spain as a Non-Resident

As a UK non-resident property owner in Spain, your rental income is subject to IRNR (Impuesto sobre la Renta de No Residentes) at a flat rate of 24%.

The critical issue for UK owners post-Brexit is that no expenses can be deducted. EU and EEA residents pay 19% on their net rental income (gross income minus allowable expenses such as mortgage interest, maintenance, insurance, management fees, and depreciation). UK residents, now classified as third-country nationals, pay 24% on gross income with zero deductions.

This means:

• If you earn €15,000 in gross rental income and incur €5,000 in expenses, an EU resident pays 19% × €10,000 = €1,900
• A UK resident pays 24% × €15,000 = €3,600

This effective rate difference is the most financially significant post-Brexit change for UK property investors in Spain. There are ongoing legal challenges based on the UK–Spain double taxation treaty and non-discrimination clauses, and some tax advisers have had success claiming deductions via individual rulings, but as of early 2026, the Agencia Tributaria’s official position remains: no deductions for non-EU residents.

Your rental income is declared quarterly via Modelo 210, due within 20 days of the end of each quarter in which income is received.

The type of rental you operate affects both your licensing obligations and your tax filing approach.

Holiday Lets (Vivienda con Fines Turísticos — VFT)

If you rent your property for short stays (typically under two months at a time) to tourists, you are operating a holiday let and must hold a tourist licence issued by the Junta de Andalucía. Key requirements:

• The property must meet minimum habitability standards (hot water, heating/cooling, equipped kitchen, first-aid kit)
• You must register the property on the Registro de Turismo de Andalucía and display the VFT number on all advertising
• Guest information must be reported to the police via the Parte de Viajeros system
• The licence is granted to the property (not the owner) and is free to obtain, but must be renewed if regulations change

Note (2025–2026 update): Andalucía has introduced a moratorium on new tourist licences in certain saturated zones, particularly in Málaga city centre. The Costa del Sol coastal areas are generally still issuing licences, but check current availability before committing to a buy-to-let strategy.

Long-Term Rentals (Arrendamiento de Vivienda)

Rentals of 12 months or more fall under Spain’s Ley de Arrendamientos Urbanos (LAU), which gives tenants significant protections: minimum 5-year contract duration (7 years if the landlord is a company), rent increase caps linked to a reference index, and strict eviction procedures. No tourist licence is needed, but your obligations as a landlord are more extensive and harder to exit.

Let’s model a realistic holiday let scenario for a two-bedroom apartment purchased for €350,000 in Estepona.

While the net yield looks modest, remember that you also benefit from personal use during unrented periods, potential capital growth, and the lifestyle value of owning a holiday home in Spain.

Now let’s model the same apartment rented on a 12-month long-term contract:

The long-term let produces a higher net yield because management fees are lower (or zero) and there are no changeover costs. However, you lose all personal use of the property, and the tenant has strong legal protections under the LAU that make early termination very difficult.

As a UK tax resident, you must declare your worldwide income to HMRC, including Spanish rental income. This applies whether the property is a holiday let or a long-term rental.

How it works:

1. You declare the gross rental income on your UK Self Assessment tax return (supplementary pages SA106 for foreign property income)
2. You can deduct allowable expenses against the income for UK tax purposes — even though Spain does not allow deductions. UK-allowable expenses include mortgage interest (subject to restrictions for residential lets), letting agent fees, insurance, repairs, and travel to the property for management purposes
3. You claim double taxation relief for the IRNR already paid in Spain, reducing your UK liability by the same amount

In many cases, the Spanish tax paid at 24% on gross income will exceed the UK tax due on the net profit, meaning you have no additional UK tax to pay. However, for higher-rate UK taxpayers with low expenses, there may still be a small UK balance to settle.

Important: you must keep records of all Spanish tax payments (Modelo 210 receipts) and be able to provide evidence of double taxation relief claimed. HMRC and the Agencia Tributaria exchange information automatically under the Common Reporting Standard (CRS).

Some buyers ask whether Spain’s Beckham Law (Régimen Especial de Trabajadores Desplazados) can help reduce their rental income tax. The short answer is: no, not for rental income alone.

The Beckham Law is a special tax regime for individuals who move to Spain for work and had not been Spanish tax residents in the previous five years. It allows them to pay a flat 24% on Spanish-sourced income instead of the progressive rates (up to 47%). Crucially, it applies to employment and self-employment income, not to passive rental income. You cannot invoke the Beckham Law simply by owning a rental property in Spain.

Some UK investors also consider owning through a Spanish SL company (similar to a UK Ltd). While corporate ownership can offer deductible expenses and a headline corporation tax rate of 25%, the setup costs, annual accounting obligations, and potential issues with the company being treated as a “transparent entity” by HMRC often make this impractical for a single property. See our guide on SL company ownership for a full analysis.

For most UK owners of a single rental property on the Costa del Sol, personal ownership remains the most straightforward and cost-effective structure, despite the higher tax rate.

Here is a checklist for UK owners letting property in Spain:

• Obtain a tourist licence (VFT) if holiday letting — apply via the Junta de Andalucía’s online portal. Processing takes 2–4 weeks. Operating without a licence carries fines of €2,000–€18,000 in Andalucía.
• Appoint a fiscal representative in Spain to handle quarterly Modelo 210 filings. Cost: €150–€300 per year for rental declarations.
• Keep detailed records of all rental income, guest stays, and expenses. Even though expenses are not currently deductible in Spain, they are deductible in the UK and you will need evidence for your Self Assessment return.
• File quarterly in Spain via Modelo 210 within 20 days of the end of each quarter in which you receive rental income. For the imputed income portion (unrented periods), file annually by 31 December of the following year.
• Declare worldwide income in the UK on your Self Assessment return by 31 January following the end of the UK tax year. Claim double taxation relief using form SA106.
• Monitor legal developments. The post-Brexit expense deduction issue is subject to ongoing legal challenges. The UK–Spain tax treaty contains non-discrimination provisions that some advisers argue should allow UK residents to deduct expenses on the same basis as EU residents. Watch for updates.

Professional advice from a cross-border tax specialist familiar with both UK and Spanish systems is strongly recommended if you plan to let your property.