\n non-resident owners are required to declare a notional rental value for properties they own in Spain: Photo credit: JJFarq\/Shuttetstock <\/p>\n
The European Commission has taken formal action against Spain over its tax treatment of non-resident property owners, issuing a reasoned opinion that requires the country to amend its legislation or face further legal proceedings at EU level. The case concerns Spain\u2019s system for taxing property owned by individuals who are not tax residents but who use their homes in Spain as their main residence.<\/p>\n
Under current rules, non-resident owners are required to pay an imputed income tax on their property, even when it is not rented out and is used as a personal home. The Commission has stated that this approach may be incompatible with EU law, particularly in relation to the free movement of capital and workers within the European Union.<\/p>\n
Two-month deadline set before escalation<\/b><\/p>\n
As part of the infringement procedure<\/a><\/strong>, Brussels has issued a formal notice requiring Spain to respond within two months. If the government does not bring its rules into line with EU requirements, the case may be referred to the Court of Justice of the European Union for a binding ruling.<\/p>\n Most Read on Euro Weekly News<\/p>\n The Commission\u2019s action represents the final stage before court referral, known as a reasoned opinion, which indicates that earlier discussions and warnings have not resolved the issue. Officials argue that Spain\u2019s current tax framework places non-resident property owners at a disadvantage compared with residents in similar circumstances.<\/p>\n Tax rules at the centre of dispute<\/b><\/p>\n At the heart of the case is Spain\u2019s imputed income tax system, applied to property owned by non-residents under the Non-Resident Income Tax (IRNR) regime. Under this system, non-resident owners are required to declare a notional rental value<\/a><\/strong> for properties they own in Spain, even if those homes are not rented out. This is typically calculated as a percentage of the property\u2019s cadastral value and taxed accordingly.<\/p>\n The European Commission\u2019s concern is that this obligation continues to apply even when the property is used as the owner\u2019s permanent residence, creating a difference in treatment compared with tax residents in Spain. Residents are generally taxed on worldwide income but are not subject to the same imputed charge on their main home in the same way non-residents are.<\/p>\n Google News<\/p>\n Follow Euro Weekly News on Google News<\/p>\n Get breaking news from Spain, travel updates, and expat stories directly in your Google News feed.<\/p>\n