Commission opens infringement case against Spain over discriminatory property tax
Discriminatory tax policy targets non‑resident EU citizens
The European Commission has launched a formal infringement procedure against Spain, accusing Spanish tax authorities of imposing a discriminatory tax on non‑resident EU property owners.
Revenue generated by extra tax
- Non‑residents are required to pay a tax up to 2 % of the cadastral value of their residences in Spain.
- Only Spanish residents are exempt from this tax.
- The extra tax bill generated €137 million in revenue in 2023.
Commission’s arguments under EU law
The Commission argues that Spain’s tax rules unfairly target non‑resident EU citizens, who are required to pay income tax on their residences in Spain even if these holiday homes are legally exempt from the tax. “This discriminatory tax treatment contravenes EU law,” the Commission stated, as non‑residents should be treated equally to native residents.
European Commission formally issues notice to Spain for reported illegal taxing
EU Commission Issues Two‑Month Deadline for Spain’s IRNR
The European Commission has formally notified the Spanish government, demanding that it either brings its Non‑Resident Income Tax (IRNR) law into compliance or mounts a convincing defense. The notice grants Spain a period of two months to meet the requirements; should it fail to act, the Commission could trigger an urgent directive to abolish the tax entirely within an additional 60 days.
Potential Escalation to the CJEU
If Spain does not resolve the matter, the case may be forwarded to the Court of Justice of the European Union (CJEU). The Court could impose substantial fines on the Spanish state, reinforcing the seriousness of the infringement.
Revenue Impact of the IRNR
- In 2024 the IRNR generated more than €4 billion in tax revenue, marking a 25 per cent jump from the previous year.
- During the first four months of 2025, taxpayers have already declared €1.675 billion in non‑resident income.
Implications for British Property Owners
Presently, the infringement procedure does not directly affect British property owners in Spain, as the United Kingdom is no longer an EU member state following Brexit. Nevertheless, the situation could evolve in the near future as the EU and UK negotiate a new relationship. In particular, the expected opening of the Gibraltar border may influence future tax policies that could affect British nationals.
