Renting Out Your Spanish Property: How the Double Taxation Agreement Works
Renting out a Spanish property from the United Kingdom means dealing with two tax systems at once. Here's how Spain's Modelo 210 works, what the double taxation agreement actually does for you, and what to have ready before you speak to an adviser.
Who is behind this page. Sókerim is a Spanish real-estate agency (Lyrio Home Solutions, S.L.) with offices in the Madrid region and Alicante and a network of about 1,000 collaborating agencies across Spain. We help people who live abroad find, buy and manage property in Spain, in English, from the first search to the keys.
Two Countries, One Rental Income
If you buy a home in Spain and let it out, whether to long-term tenants or holidaymakers, the rental income doesn't belong to only one tax system. Spain taxes income earned on Spanish soil, and the United Kingdom, as your country of residence, generally expects you to report worldwide income too. Understanding how the two overlap — and don't overlap — saves both money and stress.
This isn't a loophole to avoid tax altogether; the double taxation agreement between Spain and the United Kingdom exists precisely so the same income isn't taxed twice in full. What it requires from you is accurate, timely paperwork on both sides, starting with Spain's non-resident tax return, known as Modelo 210.
Spain and the United Kingdom have a double taxation agreement, but it only works smoothly if you file Modelo 210 and keep your UK return aligned with it.
How Spain Taxes Rental Income from Your Property
Any non-resident who rents out a Spanish property has to declare that income in Spain through Modelo 210, the non-resident income tax return, regardless of what is also owed in the United Kingdom. This applies whether the tenant stays for a year or for a fortnight of summer holidays.
Even when the property stands empty for part of the year, owners who don't rent it out are still expected to declare a notional, or deemed, income on the same form. On top of this, IBI, the local property tax, and community fees run as separate, ongoing yearly costs that sit outside Modelo 210 altogether.
A local tax adviser should confirm exactly how rental income or gains from a Spanish property must be declared in Spain and reported to HMRC, since allowable expenses and timing can differ between the two systems.
How the UK-Spain Agreement Works in Practice
As a UK tax resident, you're generally expected to report worldwide income to HMRC through Self Assessment, including whatever rent you earn on a Spanish property. The double taxation agreement between Spain and the United Kingdom typically allows you to offset the Spanish tax you've already paid against what you owe at home, so the same income isn't taxed twice in full.
That credit, though, doesn't remove the obligation to declare the income correctly in both countries. A gestoría or tax adviser based in Spain usually handles the Modelo 210 side, while your UK accountant handles the Self Assessment side, and the two need to line up.
NIE
Your Starting Point
Before you can file Modelo 210, or even sign at the notary, you need a Spanish tax identification number, the NIE. Without it, declaring rental income or paying any Spanish tax simply isn't possible.
90/180
How Long You Can Stay Without a Visa
As the United Kingdom is no longer an EU member state, British owners can stay in Spain for up to 90 days in any 180-day period without a visa. Staying longer, say to manage tenants or oversee renovation work directly, requires a visa or residence permit.
| Obligation | Frequency | Who it applies to |
|---|---|---|
| Modelo 210 (rental income) | Quarterly | Non-resident owners who rent out the property |
| Modelo 210 (deemed income) | Annual | Non-resident owners who don't rent it out |
| IBI (local property tax) | Annual | All owners, resident or not |
| Plusvalía (municipal gain tax) | At sale | Sellers of the property |
What Helps When You Sit Down with a Tax Adviser
When you first discuss your Spanish rental income with a tax adviser or gestoría, having your UK paperwork in order speeds things up considerably. It helps them map what you've already paid against what Spain expects, and gives HMRC a clear trail if your filing is ever queried.
None of these documents change the tax rate itself; they simply let the two sides of a double taxation agreement work as intended, with each country able to see what the other has already taxed.
- Proof of income: a recent P60 and payslips
- Your last filed UK Self Assessment tax return
- Bank statements from the last three to six months
- Evidence of any existing loans or mortgage commitments
- A valid passport or UK national identity document
Currency, Licences and Selling Later
Since the United Kingdom uses the pound sterling rather than the euro, converting rental income back home, or sending funds to Spain for management and renovation costs, means exchange-rate movements affect what actually arrives in each currency. It's worth building that into any ongoing budgeting rather than assuming a fixed figure.
If you plan to let the property to short-term tourists, check regional licensing rules first, as many regions and individual buildings restrict or require a permit for this kind of letting. And when the day comes to sell, Spain withholds 3% of the price from a non-resident seller on account of tax, on top of the municipal plusvalía tax on the land value.
If you live in the United Kingdom
Spain is a relatively short flight away from most UK airports, making regular visits to a Spanish property straightforward for owners based in Britain. Many British buyers are drawn to Spain for its climate, coastal lifestyle and established expatriate communities. One practical point to bear in mind is that Spanish inheritance law differs from UK rules, so it is worth taking specific advice on how it may affect the property and one's estate. Currency movements between sterling and the euro can also affect the overall cost of purchase and ongoing expenses.
What a Spanish bank will usually ask you for
- Proof of income: recent P60 and payslips
- Last filed UK tax return (Self Assessment)
- Bank statements from the last three to six months
- Evidence of existing loans or mortgage commitments
- Valid passport or UK national identity document
Tax at home and in Spain
Spain and the United Kingdom have a double taxation agreement in place, and a local tax adviser should confirm how rental income or gains from Spanish property must be declared and reported to HMRC.
Staying in Spain
As the United Kingdom is no longer an EU member state, British citizens may stay in Spain for up to 90 days in any 180-day period without a visa, and must apply for a visa or residence permit for longer stays.
Since the United Kingdom uses the pound sterling (GBP) rather than the euro, buyers should factor in exchange-rate movements and currency conversion costs when paying for a property or transferring funds to Spain.
Frequently asked questions
Do I have to pay tax in Spain if I also pay tax in the UK on the same rental income?
Not twice on the same income. Spain taxes the rental income first, through Modelo 210, and the double taxation agreement between Spain and the United Kingdom generally allows you to offset that against what you owe HMRC. You still need to declare the income in both countries, so keeping clear records from day one matters.
How often do I need to file Modelo 210?
If you rent out the property, most owners file it quarterly for the rental income earned. If the property stands empty for stretches and isn't let, there's also an annual filing for deemed income on the time it wasn't rented. A local tax adviser can confirm which applies to your situation and keep deadlines on track.
Can I just declare everything to HMRC and skip the Spanish paperwork?
No. Spanish tax on Spanish-source rental income is owed in Spain regardless of where you live, and Modelo 210 is how non-residents declare it. HMRC reporting runs alongside this, not instead of it. The double taxation agreement prevents double taxation, not the need to file in both places.
Will Brexit affect how long I can stay at my own rental property?
Yes, in terms of visa-free time. As the United Kingdom is no longer an EU member, British owners can stay in Spain for up to 90 days in any 180-day period without a visa. Longer stays, for example to manage tenants or oversee work, need a visa or residence permit arranged in advance.
Does the exchange rate between pounds and euros affect my Spanish tax bill?
Spanish tax is calculated and paid in euros, based on euro income, so the headline figure isn't directly affected by sterling movements. What does change is how much that euro amount costs you in pounds when you convert funds, which is worth factoring into any ongoing budgeting for management or tax payments.