A milestone in the fight against discrimination against non-EU residents 

National Court Ruling 3630/2025 is a significant milestone in the taxation of non-EU residents in Spain. Previously, taxpayers who obtained income from the rental of properties located in Spain could not deduct any expenses and were obliged to pay tax at a rate of 24% on gross income. This was in contrast to EU residents, who were subject to a reduced rate of 19% on net income. This situation gave rise to clear discrimination, raising doubts as to its compatibility with European law, in addition to its economic impact.

Thus, the present judgment is primarily based on CJEU case law on non-discrimination in taxation. This includes the judgment of 15 March 2007 in case C-35/05 (Reemtsma); the judgment of 30 September 2003 in case C-224/01 (Köbler); and the judgment of 3 September 2014 in case C-127/12 (Commission v Spain). The latter annulled a similar regime for infringing the free movement of capital, even with regard to third countries. It also refers to Article 25 of the Convention between Spain and the United States for the avoidance of double taxation, which specifically prohibits discrimination in access to tax benefits. It also refers to the doctrine established by the Supreme Court, particularly in Judgment 242/2018 on inheritance and gifts, which explicitly confirmed an infringement of Community law. Finally, it refers to the binding consultations of the Directorate-General for Taxation (DGT) (V3151-18 and V3193-18), which recall that Article 63 of the TFEU prevents unequal and discriminatory tax treatment of residents and non-residents.

The practical consequences are significant: if this criterion is confirmed, non-resident taxpayers from outside the European Union will be able to deduct necessary lease-related expenses on the same terms as EU taxpayers. Deductible items include mortgage interest, repair and maintenance costs, local taxes, insurance, and administrative services. This would effectively reduce the tax burden and substantially improve legal certainty for international investors in the Spanish property market. Additionally, it opens up the possibility of rectifying previous self-assessments and claiming back undue payments in cases where the deduction of expenses has been denied. This ruling represents a step towards full equality of tax rights between EU and non-EU residents, thereby reinforcing the consistency of the Spanish tax system with European law.

While the ruling is not final as it is subject to appeal in the Supreme Court, it sets a clear precedent and provides a solid legal basis.