Spaniards abroad can reclaim tax on rent in Spain.

A recent ruling by the European Court of Justice opens the door for Spaniards to reclaim the reduction that residents apply to their personal income tax (IRPF).

European Justice can facilitate a Spaniard living abroad to recover overpaid taxes under the Non-Resident Income Tax (IRNR) for renting their property.

The National Court of Justice is now due to rule in the coming weeks in favor of Spanish residents abroad who pay taxes in Spain for rental properties located in the country.

Officials in the Audiencia familiar with the IRNR appeal told OKDIARIO newspaper last Wednesday.

This is due to a recent decision of the Court of Justice of the European Union (CJEU) concerning a similar situation in German inheritance tax.

According to sources from the judiciary, "the possibility of tax refunds for Spanish residents abroad should be enshrined in law, given the difference in taxation between rental residents who are able to obtain a reduction of up to 60% in their personal income tax (IRPF) and Spanish non-residents living abroad who do not qualify for such a reduction."

According to other taxation experts, it is "a great source of revenue for the Spanish state".

They explain that "other countries allow tax residents to avoid paying taxes on income they generate abroad, although this is not a typical practice."

For example, "in other countries, such as the United States, regardless of where one lives, all worldwide income is taxable, that is, income earned both inside and outside the United States, even if the taxpayer has gone abroad for life."

In the case of the Spanish tax system, if a Spaniard lives outside the country - that is, his stay abroad is more than 183 days and he has his center of interest in that country, he is obliged to pay taxes in Spain only on income from sources in Spain.

This applies to income derived from renting out real estate in Spain, despite the fact that the citizen lives outside the country.

This is a separate tax called IRNR, which is different from IRPF, which is paid by Spanish residents.

The statement is submitted quarterly, and at the moment, only the deduction of withheld tax is allowed, but not the reduction provided by law for citizens who reside most of the year in Spain.

Now, after the decision on the German inheritance tax, the SES has expressed support for the taxpayer, and the National Audit Office is already considering its application to the decision regarding the appeal concerning IRNR.

In this context, the court "should have submitted a preliminary question to determine whether the CJEU ruling applies to national legislation."

Referring to the case of model 720, which Spanish residents were required to report their foreign assets, and which was subsequently deemed illegal by the European Court of Justice due to its confiscatory sanctions regime and removed from Spanish legislation.