Emily Carter lives in Austin (Texas) and inherited two properties in Valencia from her grandmother. The first is a flat in Benimaclet let to a family for 1,000 € a month. The second is a ground-floor commercial unit in the same neighbourhood which, since January 2026, she has let to Sergio, a self-employed physiotherapist, for 1,200 € a month plus VAT. The family pays her the full 1,000 €. Sergio transfers 912 € a month plus VAT and tells her the remaining 288 € are "the withholding for Hacienda". Emily does not understand why one tenant withholds and the other does not, nor what she has to do with that withholding.
It depends not on the contract, but on who pays
Article 31.1 of the IRNR Law (the non-residents' income tax law) sets out who is obliged to withhold when paying income to a non-resident. The two cases that matter in a letting are these:
- Entities resident in Spain, including comunidades de bienes (co-ownership arrangements) and other entities under the income attribution regime.
- Resident individuals carrying on business activities, in respect of the income they pay in the course of those activities.
The family in Benimaclet pays the rent on their home as private individuals, not as part of any activity. They have no obligation to withhold. Sergio, on the other hand, pays for the premises where he works as a physiotherapist: that payment is part of his activity, so he must withhold. If Sergio rented a flat to live in himself, even though he is still self-employed, he would not withhold, because he does not pay that rent in the course of his activity.
| Tenant | Use of the property | Withholds? |
|---|---|---|
| Family, private individuals | Their home | No |
| Self-employed person | Their home | No |
| Self-employed person | Premises or office for their activity | Yes |
| Spanish company | Office, premises or home for an employee | Yes |
| Comunidad de bienes running a business | Business premises | Yes |
The case of a company renting a flat to house an executive, with its own figures, is developed in I let my flat to a company.
How much is withheld, and on what base
The withholding is not a percentage the tenant chooses. Article 31.2 says it must be equivalent to the tax resulting from applying the IRNR Law while disregarding, among other provisions, article 24.6, which is the one that allows residents of the European Union or the European Economic Area to deduct expenses. In other words, the withholding is always calculated on the gross income, without VAT.
The rate is the one in article 25.1.a): 24 % in general and 19 % for residents of another European Union state, or of a European Economic Area state with an effective exchange of information, which in practice covers Iceland, Norway and Liechtenstein. Emily lives in the United States, so her rate is 24 %.
- Monthly rent for the premises: 1,200 €.
- Withholding at 24 %: 288 €.
- What Emily receives, leaving VAT aside: 912 €.
- Annual withholding: 288 × 12 = 3,456 €.
If Emily could prove residence in a country with a tax treaty that capped the tax on rental income, the withholding would have to be adjusted to that cap. In the usual treaties, real estate is taxed without limit in the country where it is located, so normally the treaty does not change this figure.
When the withholding is already the tax
This is what surprises Emily most. Article 28.3 of the IRNR Law says that the taxpayer is not required to file a return for income on which the withholding under article 31 has been made. For her, at 24 % on the gross income and with no deductible expenses, the withholding matches the tax exactly:
| Property | Annual income | IRNR tax at 24 % | Withheld | Does she have to file a 210? |
|---|---|---|---|---|
| Premises, tenant Sergio | 14,400 € | 3,456 € | 3,456 € | She is not obliged to |
| Flat, family as tenants | 12,000 € | 2,880 € | 0 € | Yes, and she pays 2,880 € |
For the flat, the 210 for the 2026 rental is filed from 1 to 20 April 2027, or until the 15th if payment is by direct debit, under Order HAC/623/2026. For the premises she does not have to file anything, provided the withholding has actually been made.
The exemption from filing in article 28.3 rests on the withholding having been made. Ask the tenant for the annual withholding certificate and check that your NIE, the period and the amounts are correct. If the tenant deducted it but did not pay it in, article 31.3 obliges the tenant to pay it, but it is best to know as soon as possible.
Why filing does pay for a European resident
Suppose Emily lived in Lisbon. The withholding would still be calculated on the gross income, although at 19 %: 14,400 × 19 % = 2,736 €. But as a European Union resident she could deduct the expenses of the premises directly related to that income. With 4,000 € of expenses for the year:
- Gross income: 14,400 €.
- Deductible expenses: 4,000 €.
- Taxable base: 10,400 €.
- Tax at 19 %: 1,976 €.
- Withheld by the tenant: 2,736 €.
- Difference to be refunded: 760 €.
Those 760 € can only be recovered by filing a 210 showing a refund. Nobody refunds them automatically. For those resident outside the European Union, domestic law does not allow expenses to be deducted, and there is an open court debate on whether that is compatible with the free movement of capital. Where that question stands is explained in deducting expenses when you live outside the EU. It is not a guaranteed outcome.
If you would like us to check whether your withholdings add up and whether it is worth filing a 210 to recover part of them, you can send us the contracts and the certificates through the non-residents form.
What the tenant does on their side
Sergio pays in the withholdings with Modelo 216 within the periods that apply to him and files the Modelo 296 annual summary each year. Article 31.5 also obliges him to give Emily a certificate of the withholdings made. That certificate is what Emily needs to keep.
If the tenant did not withhold when he should have, the problem is mainly his: article 31.3 establishes that the person obliged to withhold must pay the amount in even if they have not deducted it. But Emily is not released: if there was no withholding, there is no exemption from filing either, and she must declare the income with her own 210. She cannot deduct a withholding she did not bear.
When withholding can be avoided
Article 31.4.c) provides that no withholding is made if the non-resident proves payment of the tax or that an exemption applies. In practice, that requires Emily to file and pay her 210 before Sergio pays her, and for him to keep the receipt. It is a useful route for European Union residents with high expenses, because it avoids paying in advance a tax that would later be refunded. It requires order and coordination month by month, and it is not always worth it.
VAT on the premises is a separate matter
The premises carry VAT; the flat, let as a home, does not. What Sergio withholds is calculated on the rent without VAT, and VAT follows its own rules and its own returns, which Emily must review independently of the withholding. Mixing the two figures in a single transfer without a breakdown is the quickest way to make the withholding certificate and the invoice fail to match.
For those on the other side of the contract, with a resident landlord, the rules are those of IRPF (the Spanish personal income tax) and are set out in whether I have to withhold from my landlord. And how many returns are due when there are several properties or owners, in how many Modelo 210 returns I have to file.
The Salama Tax non-residents page explains the rates, the deadlines and how withholdings and returns fit together when more than one property is let.