Rental Loss Relief in Spain: Can Non-Resident Landlords Offset Losses and Carry Forward Negative Income?

A non-resident landlord whose Spanish rental expenses exceed rental income faces a structural barrier that residents do not: the IRNR taxes each income item separately, with no compensation between them. Under Article 15 of the consolidated Ley del IRNR (Real Decreto Legislativo 5/2004), non-residents without a permanent establishment “tributarán de forma separada por cada devengo total o parcial de renta sometida a gravamen, sin que sea posible compensación alguna entre aquéllas”. This means a rental loss cannot offset rental profit on another property, another year, or any other Spanish-source income. The deduction rules under Article 24.6 for EU and EEA landlords reduce the taxable base per accrual, but they do not create a carryforward loss the way the IRPF framework does for residents.

How does the IRNR treat rental income for non-residents?

The IRNR (Impuesto sobre la Renta de No Residentes) taxes Spanish-source rental income at flat rates: 19 per cent for residents of EU and EEA states with effective information exchange, and 24 per cent for all other non-residents, as confirmed on the AEAT tax rates page. The critical distinction from the resident IRPF is the base on which the rate applies.

Under Article 24.1 of the LIRNR, the general rule is that the taxable base is the full gross amount received, with no expense deductions. Article 24.6 creates an exception: EU and EEA natural persons may deduct the expenses provided for in the IRPF law (Ley 35/2006, Article 23), provided the expenses are directly related to the Spanish rental income and have a direct and inseparable economic link to the activity in Spain. The AEAT guidance on determining the taxable base confirms this structure: gross income is the default, and the EU/EEA deduction is the exception.

For a full breakdown of the deduction categories available to EU landlords, see our guide to rental tax deductions for non-resident landlords. For the broader IRNR framework, see our IRNR explainer.

Why can a non-resident not carry forward a rental loss?

The answer lies in Article 15 of the LIRNR, which governs how non-residents are taxed. For those without a permanent establishment, the law is explicit: they are taxed separately on each total or partial income accrual, with no compensation possible between them. This is the structural rule that prevents loss carryforward.

Contrast this with the IRPF regime for residents. Under Article 23.1.a of Ley 35/2006, a resident landlord deducts interest, financing costs, repairs and conservation expenses against rental income, and if the total deduction exceeds the rental income received, the excess “se podrá deducir en los cuatro años siguientes”. Article 47 of the same law then provides the integration and compensation framework that allows negative rental yields to offset other general-base income within limits, and to carry forward for four years. The IRNR has no equivalent provision for non-residents without a permanent establishment.

Feature	IRPF (resident)	IRNR without PE (non-resident)
Deductible expenses	Yes, Article 23	EU/EEA only, Article 24.6
Interest excess carryforward	4 years, Article 23.1.a	No statutory mechanism
Loss offset against other income	Yes, within Article 47 limits	No, Article 15 prohibits
Rental reduction (residential)	20-90 per cent on net positive	Not available under IRNR
Aggregate net income basis	Yes	No, per-accrual taxation

The table shows the core difference. A resident landlord who spends EUR 15,000 on a mortgage and repairs against EUR 12,000 of rent can carry the EUR 3,000 negative yield forward and offset it against future rental profit or other general-base income within the four-year window. A non-resident landlord in the same position cannot, because the IRNR does not aggregate income across accruals or years.

What can an EU landlord do when expenses exceed income?

An EU or EEA landlord who deducts expenses under Article 24.6 and finds that the deductions exceed the rental income for a given accrual faces a practical question: what happens to the excess?

The statute does not provide a carryforward mechanism for the IRNR. Article 24.6 allows the deduction of IRPF expenses to determine the taxable base, but it does not import the IRPF’s loss integration and compensation rules from Articles 47 and 48 of Ley 35/2006. The AEAT rental income guidance states that the grouping period for Modelo 210 becomes annual for self-assessments with a nil or refund result, and that “under no circumstances may grouped income offset one another”. This confirms that even when income is grouped for filing convenience, the offset prohibition remains.

In practice, this means an EU landlord should still file the Modelo 210 declaring the income and claiming the deductions. If the net result is nil or negative, the filing records the deductions formally. Filing establishes the formal position and preserves the right to any future relief if the law changes.

What is the position for non-EU landlords?

Non-EU landlords are taxed on gross rental income under Article 24.1, with no deductions. This means the question of a rental loss does not arise in the same way: there is no deduction that could produce a negative result. The tax is 24 per cent of the full rent received.

However, the Audiencia Nacional issued a significant ruling on 28 July 2025 (SAN 3630/2025, ECLI:ES:AN:2025:3630) holding that denying expense deductions to non-EU residents violates the free movement of capital under Article 63 of the Treaty on the Functioning of the European Union. The case involved a US-resident owner of a Barcelona rental property. The ruling applied the CJEU reasoning on capital movement to the Spanish IRNR’s differential treatment of EU and non-EU landlords.

The position is not yet settled. The Spanish Tax Agency (Hacienda) has indicated it will continue to reject administrative appeals until the Supreme Court (Tribunal Supremo) issues a binding ruling. The State’s legal service (Abogacia del Estado) has filed an appeal (recurso de casacion) to the Supreme Court, which is now studying the case. A ruling may take two to three years. Separately, the differential tax rates (19 per cent for EU/EEA versus 24 per cent for non-EU) are also being challenged before the Audiencia Nacional, with the Supreme Court expected to have the final word on both issues.

A non-EU landlord who has been paying tax on gross rent may file a protective rectification (rectificacion de autoliquidacion) of past Modelo 210 returns within the four-year prescription window under Article 66 of the Ley General Tributaria (Ley 58/2003). This filing preserves the right to a refund if the Audiencia Nacional ruling is upheld, but it does not produce an immediate repayment. For the refund process itself, see our guide to the Modelo 210 tax refund.

How does the European Commission infringement case affect non-resident landlords?

The European Commission has been pressing Spain on a separate but related front: the denial of rental income reductions to non-resident landlords. The Commission opened an infringement case in March 2019, sending a first letter of formal notice requesting that Spain correct the irregularity. In June 2026 the Commission expanded the case with a supplementary letter of formal notice, as reported by Expansion.

The core complaint is that Spain’s rental income reductions, which range from 20 to 90 per cent of the taxable base depending on the tenant profile and rent level, are embedded in the IRPF law (Ley 35/2006) and not in the IRNR. Hacienda argues that Article 24.1 of the LIRNR refers to the IRPF rules for determining gross income but explicitly excludes the reductions. The Commission considers this a restriction on the free movement of capital under Article 63 TFEU, and notes that Spain has not amended its legislation in seven years despite repeated notifications. In fact, the 2025 reforms introduced new resident-only reductions of up to 90 per cent, which the Commission says aggravated the discrimination.

Spain has two months to respond to the supplementary letter. If the response is unsatisfactory, the Commission may issue a reasoned opinion, the final step before referring the case to the Court of Justice of the European Union (CJEU). A CJEU ruling against Spain would compel the government to amend the LIRNR and could entitle non-resident landlords to retroactive relief for the reductions denied.

The infringement case targets EU and EEA resident landlords specifically, but the SAN 3630/2025 ruling extends the equal-treatment principle to non-EU landlords on free movement of capital grounds. Together, these two proceedings create converging pressure on Spain to equalise the rental tax treatment of residents and non-residents. For the broader IRNR framework, see our IRNR explainer.

What changes does Orden HAC/623/2026 bring to Modelo 210 filing?

Orden HAC/623/2026, de 12 de junio, published in the BOE on 23 June 2026 and entering into force on 24 June 2026, introduces two categories of changes that affect non-resident landlords filing Modelo 210. The AEAT explanatory note sets out the transitional rules.

New form content (applicable to filings from 1 January 2027, regardless of accrual date):

• A new deductible expense breakdown annex for rented or sublet properties, requiring landlords who claim Article 24.6 deductions to itemise each expense category.
• Two new form fields, “Nº de días” (number of days the property was at the owner’s disposal or rented) and “Cuota participación” (ownership participation percentage), for both imputed income and rental income declarations.
• A new cadastral reference key field, indicating whether the property has a cadastral reference (value 1) or not (value 2).

New filing deadlines (applicable to 2026 accruals filed in 2027):

• Imputed income: the filing window moves from 1 January to 1 April, becoming 1 April to 31 December of the year following the accrual year.
• Rental income with a positive (payable) result, filed annually: the deadline becomes the first 20 calendar days of April of the year following accrual. The grouping period for rental income changed from quarterly to annual for devengos from 2024 onwards.
• Rental income filed separately (not grouped): the new April deadline applies only to accruals in the last quarter of 2026 (October, November, December); earlier 2026 quarters retain the old quarterly deadlines (first 20 days of July and October 2026).

For a landlord whose EU deductions produce a nil or negative result, the annual grouping filing remains the route, but the deadline moves to April for 2026 accruals filed in 2027. This aligns the nil-result filing window with the new positive-result April deadline, replacing the previous January window.

Does the Article 46 IRPF option help?

Article 46 of the LIRNR allows EU and EEA natural persons to elect to be taxed under IRPF rules rather than the flat IRNR rates, if at least 75 per cent of their total income comes from Spanish work or economic activities. The AEAT guidance on the Article 46 option explains that the administration calculates a medium tax rate applied to the Spanish-source base.

For a landlord whose rental activity qualifies as an economic activity (which requires personnel and a dedicated structure, not merely passive letting), the Article 46 election could open access to the full IRPF loss integration and carryforward rules. This is a narrow route: most non-resident landlords are passive owners whose rental income does not constitute an economic activity under the IRNR, and the 75 per cent income threshold is high. For most landlords, the Article 46 route is not a practical solution to the loss carryforward problem.

How should a landlord file a Modelo 210 with a negative result?

The filing mechanics for a nil or negative result differ from a positive return. According to the AEAT rental income guidance, the grouping period for Modelo 210 is annual for self-assessments with a nil or refund result. Under Orden HAC/623/2026, the annual deadline for 2026 accruals (filed in 2027) moves to the first 20 days of April for positive results and to the 1 April to 31 December window for nil or refund results.

A landlord should file the Modelo 210 declaring the gross income and, where eligible, the deductible expenses. If the deductions produce a nil or negative base, the return records that position. The return does not generate a tax credit or a loss to carry forward, but it establishes the formal record of the deductions claimed, which matters for audit defence and for any future rectification.

For the practical filing process and the deduction categories, see our Modelo 210 rental income guide. For the broader rental compliance picture including short lets, see our complete guide to renting out property in Spain as a non-resident.

Worked example: EU versus non-EU landlord with the same property

Consider two landlords, both non-resident, each owning a EUR 300,000 apartment in Marbella rented for EUR 12,000 per year. Both incur EUR 9,000 in deductible expenses (mortgage interest EUR 6,000, IBI and community fees EUR 1,500, insurance and management EUR 1,500) and EUR 7,200 in amortization (3 per cent of EUR 240,000, excluding land).

Scenario	EU landlord (Article 24.6)	Non-EU landlord (Article 24.1, pre-ruling)
Gross rental income	EUR 12,000	EUR 12,000
Deductible expenses	EUR 16,200	EUR 0
Taxable base	EUR 0 (negative, nil return)	EUR 12,000
Tax rate	19 per cent	24 per cent
Tax due	EUR 0	EUR 2,880
Loss carryforward	None under IRNR	N/A

The EU landlord files a nil return and pays no tax, but the EUR 4,200 excess of expenses over income does not carry forward under the IRNR. A resident landlord in the same position could carry the negative yield forward under IRPF Article 23.1.a and Article 47, but the non-resident cannot. The non-EU landlord pays EUR 2,880 on gross income. If the Supreme Court upholds SAN 3630/2025, the non-EU landlord could deduct the same EUR 16,200 in expenses, reducing the taxable base to nil and eliminating the EUR 2,880 tax liability, though the 24 per cent rate would still apply to any positive net result.

Under the new Orden HAC/623/2026 rules effective for 2026 accruals filed in 2027, the EU landlord’s nil return would be filed between 1 April and 31 December 2027 using the new expense breakdown annex, rather than the previous January window. The non-EU landlord’s positive return would be filed in the first 20 days of April 2027, also using the new annex form fields.

What about the fiscal representative?

A non-resident landlord who files under the Article 24.6 deduction regime or who elects the Article 46 IRPF option must appoint a fiscal representative in Spain. This is a legal requirement under Article 10 of the Reglamento del IRNR (Real Decreto 1776/2004) for non-residents who obtain income through an economic activity or who apply the EU deduction regime. The representative acts as the point of contact for Hacienda and receives notifications. For the representative’s role and cost, see our guide to the fiscal representative for non-residents.

This guide is general information, not legal or tax advice. Rules change and individual circumstances differ. Verify current requirements with an independent lawyer (abogado) or tax advisor (gestor/asesor fiscal) before acting.