Spain’s 2025 Tax Hike on Vacant Properties for Non-Residents

Spain’s 2025 housing reform introduces significant tax changes for non-resident property owners, particularly concerning vacant properties. Under the proposed legislation, non-residents who own unoccupied properties in Spain will face increased tax obligations through a progressive surcharge on the imputed income tax (IRNR).

Key Points:

• Imputed Income Tax (IRNR): Non-resident property owners are subject to IRNR, which taxes the notional rental income of properties, even if they are not rented out. The taxable amount is calculated based on a percentage (typically 1.1% or 2%) of the property’s cadastral value. One suggestion is to increase the tax base to 3 %.
• Progressive Surcharge for Vacant Properties: The new reform proposes a progressive surcharge on the IRNR for properties that remain vacant for extended periods. This means that the longer a property remains unoccupied, the higher the additional tax rate applied to the imputed income. The exact surcharge rates and thresholds are yet to be finalized.
• Objective: The aim is to incentivize property owners to rent out vacant properties, thereby increasing the availability of housing and addressing the housing shortage in Spain.

Implications for Non-Resident Owners:

• Increased Tax Liability: Non-resident owners of vacant properties will see a rise in their annual tax bills due to the progressive surcharge on the IRNR.
• Compliance Requirements: Owners must ensure timely and accurate filing of the Modelo 210 tax form to declare the imputed income and pay the corresponding taxes.
• Potential for Further Measures: The government may introduce additional measures to monitor and enforce the occupancy status of properties, increasing the importance of compliance for non-resident owners.

Recommendations:

• Assess Property Usage: Non-resident owners should evaluate the occupancy status of their properties and consider renting them out to avoid higher tax rates.
• Stay Informed: Keep abreast of the final details of the reform and any additional regulations that may be introduced.
• Seek Professional Advice: Consult with tax professionals or legal advisors specializing in Spanish property law to ensure compliance and optimize tax obligations.

By proactively addressing these changes, non-resident property owners can mitigate the financial impact of the new tax measures and contribute to alleviating Spain’s housing shortage