Spain Faces EU Legal Action Over Tax Charged on Non-Resident Property Owners

The Tax That Has Caught Brussels' Attention

The European Commission has issued a formal reasoned opinion against Spain over its Non-Resident Income Tax (IRNR) — the system that requires non-resident property owners to declare a notional rental value for properties they own in Spain, regardless of whether those properties are ever actually rented out.

Under the current rules, the imputed income is calculated as a percentage of the property's cadastral (rateable) value and taxed accordingly — meaning owners are effectively taxed on income they have never received.

What Brussels Is Arguing

The Commission argues that Spain's system violates EU principles protecting the free movement of capital and the right to non-discrimination between EU citizens. Brussels contends that taxing non-residents on notional income from their primary or secondary residences — while Spanish residents escape similar charges — creates an unjustified barrier to cross-border property ownership within the EU single market.

Where the Legal Process Stands

A formal reasoned opinion is the final stage before referral to the Court of Justice of the EU (CJEU). Spain now has two months to respond to the Commission's concerns — either by justifying the current system or proposing legislative amendments.

If that response is deemed insufficient, the case will be referred to the CJEU for a binding judicial ruling. A finding against Spain could force significant changes to how non-resident property owners are taxed — and could set a precedent affecting other EU member states with comparable systems.

What This Means for Non-Resident Property Owners

For the many expats, British nationals and other non-EU residents who own property in Spain but do not rent it out, this case could ultimately result in meaningful changes to their annual tax obligations. The current IRNR liability is a widely misunderstood cost of Spanish property ownership — particularly for those who leave their Spanish home empty for much of the year.

No changes are imminent — the legal process could take years to conclude — but property owners should monitor developments and take advice from a qualified Spanish tax specialist on their current obligations.

This article is based on reporting from Euro Weekly News, published May 6, 2026.