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Spanish National Court: Non-EU/EEA residents may also deduct expenses under the NRIT

The Spanish National Court (Audiencia Nacional) has recently issued ruling SAN 3630/2025 (28 July 2025), setting an important precedent in the taxation of non-residents in Spain.

The Spanish National Court (Audiencia Nacional) has recently issued ruling SAN 3630/2025 (28 July 2025)
The Spanish National Court (Audiencia Nacional) has recently issued ruling SAN 3630/2025 (28 July 2025)

The case involved a taxpayer resident in the United States, owner of a property in Barcelona rented to third parties. The Tax Administration (National Office of Tax Management and later the TEAC) denied the deduction of rental-related expenses in the Form 210 – Non-Resident Income Tax (NRIT), arguing that the law only allows such deductions for residents in the European Union or the European Economic Area (EEA) with effective exchange of information.


The National Court overturned this reasoning, ruling that restricting the deduction exclusively to EU/EEA residents is discriminatory and contrary to the free movement of capital (Article 63 TFEU). As a result, the Court extended the right to deduct expenses to residents of third countries —such as the U.S.— provided that such expenses are directly linked to the income obtained in Spain.


Key takeaways:

  • The decision does not amend the law but establishes a judicial precedent: the Tax Administration is likely to continue rejecting these deductions at first instance.

  • Deductible expenses are limited to those direct and inseparable from the rental activity (e.g. community fees, property tax, necessary repairs, mortgage interest).

  • The taxpayer must properly substantiate each expense with supporting evidence.

  • The ruling may still be subject to appeal before the Supreme Court, which could further consolidate or nuance the interpretation.


Conclusion

This ruling opens a significant tax optimization opportunity for non-EU/EEA residents owning property in Spain, while highlighting the importance of tailored advice and a sound procedural strategy.


At Business Expats, we support our international clients in navigating these challenges, bringing together expertise in international taxation, mobility and wealth structuring, with a strong focus on legal certainty and tax efficiency.


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