Taxed on gross rent? The 2025 court ruling and possible overpayment

What the tax office does today

The Spanish tax agency (AEAT) charges UK residents, like other non-EU owners, 24% on gross rent, with no costs deducted. Owners resident in the EU or EEA pay 19% on rent after costs.

What the court said

On 28 July 2025 Spain's National Court (Audiencia Nacional, SAN 3630/2025) ruled that refusing non-EU owners the deductions EU owners get breaches the EU rule on free movement of capital.

On 15 July 2026 the Supreme Court admitted an appeal against that ruling. The outcome is pending, and the case may be referred to the EU Court of Justice. Until then the tax office's practice is unclear and it still applies 24% on gross rent.

What the difference can be

Example: €9,600 of rent and €2,400 of costs (IBI, community fees, insurance, repairs). Today: 24% of €9,600 = €2,304. With costs deducted, still at 24%: 24% of €7,200 = €1,728. The difference is €576 for that year.

That's an estimate under one assumption: the ruling concerns deductions, so this keeps the 24% rate. If the final outcome differs, so does the figure.

The four-year time limit

Spain's general tax law gives you four years to claim back tax paid that wasn't due. For a return filed and paid on time, the four years start the day after that return's filing period ended. Each year's return has its own window, so the oldest year drops out first.

For years still open you can ask the tax office to correct a return (rectification) and refund the overpaid tax. Whether to do that now, while the appeal runs, is a question for an adviser.

What to do now

Keep invoices and receipts for every cost linked to letting: IBI, community fees, insurance, repairs and mortgage interest. Without them you can't claim, whatever the courts decide.

On the UK side, if Spain repays tax you've already claimed as a foreign tax credit, the credit falls and you may need to correct your UK return.