Non-Resident Tax
Non-Resident Tax in Spain and Your Real Yield
How IRNR, IBI, rental income tax, and capital gains affect net yields for foreign owners in Spain. Worked examples for three investor profiles.
What IRNR Actually Is
Spanish property yields look strong on paper. EUR 900 a month on a EUR 280,000 apartment is a 3.9% gross yield. Then IRNR shows up and the maths changes.
If you spend fewer than 183 days a year in Spain and your economic centre is elsewhere, Hacienda treats you as a non-resident. That status is fine and common. The catch is that Spain charges a separate Non-Resident Income Tax (IRNR) on the property whether you rent it out or leave it empty for the whole year.
IRNR is automatic. The taxable base is a notional yield calculated from the cadastral value, not the market price: 1.1% if the cadastral value was reviewed in the last ten years, 2% otherwise. You then pay 19% on that base if you're tax-resident in the EU, Iceland, or Norway, and 24% if you're tax-resident anywhere else. The 24% rate also blocks most deductions on rental income, which is the bigger sting.
The article you're reading isn't about avoiding IRNR. There's no legal way to do that as a non-resident. It's about planning around it so your real yield calculation matches what actually lands in your account.
The Full Tax Stack
IRNR is one line item. Spanish property comes with a layered set of taxes that hit at different points. Most yield numbers quoted online use gross rent and quietly ignore three or four of these.
| Tax | When | Rate or base |
|---|---|---|
| IRNR (imputed) | Annually, vacant days only | 19% EU/EEA or 24% other, on 1.1-2% of cadastral value |
| IRNR (rental) | Annually if let | 19% EU/EEA on net rent, 24% other on gross rent |
| IBI | Annually, to the town hall | 0.4-1.1% of cadastral value, depending on the municipality |
| Capital gains | When you sell | 19% on the taxable gain |
| Plusvalia | When you sell | Municipal, based on cadastral land-value increase |
| Wealth tax | Annually, above the regional threshold | Regional. Currently suspended or near-zero in Madrid and Andalucia |
EU and EEA residents can deduct mortgage interest, IBI, community fees, maintenance, manager fees, and utilities from rental income before paying the 19%. Buyers outside the EU/EEA, including British investors after Brexit, cannot. They pay 24% on gross rent. That single rule changes the economics of holiday lets more than any other factor.
Want to see the full breakdown of purchase-side costs? Our costs and taxes guide walks through transfer tax, notary, and registry charges.
Three Investors, Three Real Yields
Three realistic scenarios, built from typical 2026 cadastral and rental data on the Costa Blanca, Costa del Sol, and central Madrid. Cadastral value is treated as 70-80% of market price, which is normal for properties reviewed in the last decade. Numbers are rounded.
The Madrid number looks better, but that's only because the gross yield is higher (6%) to begin with. Run the same Madrid property under EU rules and you'd land around 3.4% net. The 24% non-EU rate quietly removes about half a percent of yield on a typical urban long-let. On a holiday let where deductions matter more, the gap widens.
Two patterns are worth taking away. Coastal long-lets at sub-4% gross rarely clear 2% net once IRNR and running costs are included. Holiday lets carry higher gross rents but also higher costs, and the manager fee alone often eats the rental tax advantage. If you want stronger nominal yields, you usually find them in capital growth and urban locations, not the coast.
Capital Gains When You Sell
Selling a Spanish property triggers two more taxes: capital gains tax and the municipal plusvalia. Capital gains is paid to the Spanish state on the difference between purchase price and sale price, after deductible costs. For non-residents the rate is a flat 19% with no general residence-allowance exemptions.
At completion, the buyer must withhold 3% of the sale price and pay it to Hacienda as an advance on your capital gains liability. You reconcile the final amount by filing Form 210 within three months. If your actual gain is small, zero, or a loss, you can claim the 3% back, but only if you file. Foreign sellers regularly leave that money behind.
Deductible from the gain: original notary, registry, ITP or VAT, legal fees, structural improvements with invoices, and selling-side agent commission. Cosmetic work and unreceipted spend do not count.
Plusvalia rules changed in late 2021. If the cadastral land value has not actually risen since you bought, you can opt out of the tax with documentation. Most sellers don't know this and pay the default rate.
For the seller-side process in full, including how to time the sale and minimise CGT exposure, see our capital gains tax guide.
Run the Numbers
Stress-Test Your Spanish Investment
Real yields are the difference between a good deal and a slow drain. Use our buying and annual cost guides to model your own scenario before you sign.
See Costs and Taxes Guide
