Rental Income in Spain: Benefits, Tax, and Legal Essentials

What is the Rental Yield in Spain?According to 2025 data, rental yields in Spain average 5% to 7% net for short-term (tourist) rentals and 3% to 5% net for long-term rentals.

Rental yields vary by city and region. Popular coastal cities and central locations often deliver returns above the national average. Short-term rentals generate higher income in high-demand tourist areas, while long-term rentals offer more stable and lower-risk returns.

These figures represent net rental yields, and overall, Spain offers a stable and sustainable rental income potential for property investors.

How Does the Spanish Tax System Differ for Rental Income from Other Countries?Spain's approach to rental income tax varies from many other countries. For example, while some countries allow a higher threshold of personal allowances or tax-free income, Spain’s straightforward structure—with set rates for residents and non-residents—can simplify planning. Moreover, the flat tax rate for non-residents contrasts with progressive tax systems in other nations.

Is Rental Income Tax in Spain Different for Local and Foreign Investors?Yes. Rental income taxation in Spain differs based on the investor’s residency status. Spanish residents and EU/EEA residents pay 19% tax on net rental income, meaning they can deduct eligible expenses before taxation. Non-EU/EEA investors, however, cannot deduct expenses and must pay 24% tax on gross rental income. This rule applies regardless of whether the property is residential or commercial.

What Changes Have Been Made to Non-Resident Rental Income Tax Reporting?Recent reforms have aimed to simplify the tax declaration process for non-residents. It is now mandatory for non-residents to submit tax returns even if they have no rental income in a given year. This ensures conformity and avoids potential penalties. In addition, non-residents must also provide more detailed documentation on their rental activities.

What Tax Obligations Do Foreign Investors Have When Earning Rental Income in Spain?Rental income is generally declared in January of the following year, and owners are also required to declare imputed income for periods when the property is vacant.

For EU/EEA citizens, rental income tax is 19% on net income, and deductible expenses such as maintenance, property management fees, insurance, real estate agency commissions, and depreciation can be offset against the income. For non-EU investors, the tax rate is 24% on gross rental income, and expense deductions are not allowed under current regulations.

What is the Rental Income Tax Rate in Spain for Foreigners?For EU residents, rental income tax in Spain is 19% on net income (expenses are deductible), while for non-EU residents, the tax rate is 24% on gross income (no expense deductions allowed).

Does Using Property Management Services in Spain Provide Tax Benefits?Yes. For EU/EEA property owners in Spain, property management fees can offer tax advantages. Fees paid for professional property management services can be declared as an expense and deducted fr om Spanish rental income tax (IRNR).

To benefit from this advantage, the service must be invoiced officially. Management fees can be declared together with other deductible costs such as maintenance and insurance, helping to legally reduce the tax burden on rental income in Spain.

Does the Rental Type (Short-Term vs Long-Term) Affect Tax Benefits in Spain?Yes, the rental type does affect tax advantages in Spain. For long-term residential rentals, Spain offers tax benefits if certain conditions are met. In this case, a portion of the net rental income may be tax-exempt, making long-term rentals more attractive from a tax perspective.

For short-term (tourist) rentals, these tax reductions do not apply. In addition, short-term rentals usually require a tourist rental license, and in some regions VAT obligations may also arise.

As a result, short-term rentals often offer higher gross rental income, especially in areas with long tourist seasons and high occupancy rates. However, long-term rentals stand out with lower tax burden, fewer legal risks, and more stable income. If tourist demand is not consistently strong, long-term renting is generally the safer and more sustainable investment option in Spain.

Are There Special Tax Regimes for Entities Renting Properties?Yes, there are distinct tax regimes for entities, such as companies or partnerships, that rent properties in Spain. These entities may be subject to different rates and deductions compared to individual landlords. Corporate tax rates and the treatment of rental income can vary significantly, making professional advice crucial for business owners.

How Does the Taxation Differ for EU vs. Non-EU Residents?The main difference lies in the tax rate applied to rental income. EU residents benefit from a lower tax rate of 19%, compared with 24% for non-EU residents. In addition, EU residents can benefit from certain deductions and credits not available to their non-EU counterparts, providing financial encouragement to invest in property. For more on the regulations affecting foreigners, see our article on taxation in Spain.

Do I Need to Declare Rental Income Earned in Spain in My Country of Residence?Yes. You must declare your rental income earned in Spain in the country wh ere you are a tax resident. If there is a double taxation agreement between Spain and your country, the tax paid in Spain can usually be credited or offset against your local tax liability, according to the rules of that treaty.

The rental market in Spain offers many opportunities for investors, but it's essential to understand the nuances of taxation and legislation. Whether you're a resident or non-resident, knowing how to effectively manage your rental income can significantly improve the return on your investment. If you're considering entering the Spanish rental market, seek advice from tax professionals or legal experts to clarify matters and ensure that you comply with local laws.