Empty is not the zero point
The comparison is nearly always set up wrongly, because owners assume a closed flat costs no tax and a let one does. It is the other way round from what it looks like. A non-resident owning urban property in Spain that is neither let nor used in a business is taxed anyway, through what Spanish law calls imputed property income. Empty has a fixed price, and the right question is how much rent you need to bring in for it to be worth crossing to the other side.
The imputed amount is a percentage of the valor catastral — the rateable value the cadastre assigns to your property, which appears on your IBI bill, the annual municipal property tax. It is 1.1 % where that value has been revised within the period the law sets, and 2 % otherwise. The non-resident income tax rate is applied to that figure and it is declared on the modelo 210 during the following year. There are no costs to subtract, no mortgage to offset, and it makes no difference that the shutters were down for all twelve months. We explain the mechanics on imputed income.
The two columns
| Let | Empty | |
|---|---|---|
| What is declared | The rental profit | A percentage of the rateable value |
| The base | Income less costs, if you are resident in the EU, Iceland, Norway or Liechtenstein | 1.1 % or 2 % of the rateable value, with nothing subtracted |
| Rate | 19 % for residents of the EU, Iceland, Norway and Liechtenstein; 24 % for everyone else | 19 % or 24 %, the same split |
| Deductible costs | Yes for EU and EEA residents: IBI, service charge, insurance, mortgage interest, owner-borne utilities, depreciation | None |
| Form | Modelo 210, at whatever frequency applies for the year | Modelo 210, during the following calendar year |
| A mixed year | It splits: rental profit for the days let, imputed income for the rest | |
19 % with costs against 24 % without them
Here is the difference that really decides, and it has nothing to do with letting or not letting: it has to do with where you live. A resident of France, Germany or the Netherlands deducts costs and pays 19 % on the net. A resident of the United Kingdom, the United States or Switzerland pays 24 % on the gross, without subtracting the IBI, the service charge, the insurance, the loan interest or depreciation.
The consequence is uncomfortable to hear and worth saying clearly: a non-resident from outside the European Economic Area can run a letting that loses money in economic terms and still pay tax, because the tax does not look at the loss. For British owners, who used to deduct, this changed with the UK's departure from the European Union, and it still catches people out every year.
From how many months does letting pay
The arithmetic is simple once it is framed properly. Empty costs a fixed figure; letting costs a percentage of what comes in, plus the real costs of having tenants. As an illustration of the shape of the problem, not as a threshold that applies to anybody: a flat with a revised rateable value of 100,000 € imputes 1,100 € a year; at 19 % that is a little over two hundred euros of tax for keeping it closed. One month of reasonable rent covers that.
In other words: in pure tax terms, letting almost always wins, because the tax on a letting is paid on income that exists and the tax on an empty flat is paid on income that does not. What may not win is the operation as a whole, and that is a different conversation:
- If you live outside the European Economic Area and the property carries a mortgage, a high service charge and occasional special levies for building works, 24 % on the gross eats a very large part of the margin. That calculation belongs before the decision, not after.
- If the letting is short-term, add platform commissions, cleaning, turnover and the imputed income for the empty days, which does not go away.
- If you want to use the property for several weeks a year, the opportunity cost is not zero: the dates you want are exactly the good ones.
- If you are thinking of selling soon, a tenant with a live contract shapes the sale.
Imputed income is the single most widely ignored obligation among foreign owners, and almost always in good faith: since the flat brings in nothing, owners assume there is nothing to declare. The tax office cross-checks the cadastre against its register of non-residents without the slightest difficulty, and the letters arrive covering several years at once.
A sale by a non-resident brings with it the 3 % withheld by the buyer and a return declaring the gain. That is the moment the property's history gets reviewed, and four years of undeclared imputed income come to the surface with their surcharges. Regularising before the sale, of your own accord, costs considerably less than doing it after a letter arrives: the surcharge under article 27 of the General Tax Act is 1 %, plus 1 % for each complete month of delay, and 15 % plus interest once twelve months have passed, with a 25 % reduction if it is paid on time. A penalty, if there is one, is an order of magnitude away.
When letting it or leaving it empty, as a non-resident owner fits neither column
The property that is neither let nor genuinely empty. It turns up in three shapes, and none of them sits in the table:
- Lent free of charge to a relative. No rent, no contract, no money coming in — and yet not «empty» in the ordinary sense. The usual administrative reading is that, since there is no tenancy, imputed property income arises for the whole year, exactly as if the shutters had been down. Anyone who goes further and signs a contract at a token rent is on worse ground, because that opens the argument about the market value of a transfer between connected persons. It is a debatable point and we flag it as one: there is no comfortable answer.
- Under building work, or uninhabitable. Here there is a real distinction and it is worth knowing. Imputation is built on property capable of being used; a property under construction, or which for planning reasons cannot be occupied, generates no imputation while that lasts. An ordinary internal refurbishment does not usually suffice, and claiming it without licences, certificates and dates to prove the situation is asking for a letter.
- On the market for sale. Sitting in an agent's window interrupts nothing. Three years of for sale boards and not one offer are declared exactly like three years of closed shutters.
And a fourth, less interesting and far more numerous: co-ownership across two countries. A couple who own the flat half each do not file one return, they file two, each for their own share. When one of them has moved back to the United Kingdom and the other stayed in the Netherlands, the two halves are not even taxed the same way: one deducts costs at 19 %, the other pays 24 % of the gross, and each needs a certificate of residence from a different authority. Four siblings who inherited an apartment file four returns. It is the formal error we correct most often in this area, and it survives for years because the shortfall on each half looks too small to notice.
What to look at before deciding on letting it or leaving it empty, as a non-resident owner
The sums take an afternoon if these are on the table, and cannot be done at all without them:
- Your latest IBI receipt, which carries the rateable value and the year it was set, and tells us whether the 1.1 % or the 2 % applies.
- Your certificate of tax residence for the year in question, issued by the country you live in. It is what decides the rate and whether any cost at all can be deducted, and it is not the same document as a utility bill or a residence card.
- The deed of purchase and the dates: when you bought, in what shares, and whether anyone else appears on it.
- The outgoings, invoice by invoice: service charge, insurance, mortgage interest, repairs and any special levy voted by the building. Under one option they are worth something; under the other they are worth nothing at all.
- The returns already filed, if any, for the last four years. If there are none, that is a conversation of its own and it is better had now.
- What you intend to do with the property within five years. Selling, passing it to your children or keeping it changes which column wins, because the tax on holding it is small and the tax on disposing of it is not.
How we handle letting it or leaving it empty, as a non-resident owner
We start with your tax residence, because it decides whether you can deduct costs at all, and without that the comparison means nothing. Then we work out both columns with your rateable value, your expected rent and your real costs, including the days you intend to keep for yourself and the imputed income attaching to those days.
If you are arriving after several years of declaring nothing, we say so and put it in order: first the years still open, then the decision about the future. And if the gap between the two options turns out to be small, we say that too. All of this sits on non-resident property tax, and the form asks for the rateable value, the country you live in and little else, which is what it takes to run the numbers.