Urban leases

The National Court (AN) has ruled in favor of a US citizen who had rented an apartment in Spain and wanted to deduct certain expenses related to that lease in her Non-Resident Income Tax return. Until now, Spanish law only allowed this deduction if the owner was resident in the European Union or in the European Economic Area, provided that there were information exchange agreements. That's why, the Tax Office denied her the deduction and the Central Tax Court (TEAC) did the same afterwards. However, the claimant did not agree and insisted that this

limitation was discriminatory and contrary to European regulations, specifically to the principle of free movement of capital, and also to the double taxation agreement signed between Spain and the United States. The AN ruled in her favor, based on the fact that the Court of Justice of the European Union (CJEU) has already stated in similar cases that non-EU residents cannot be discriminated against in these tax matters, as long as there are information mechanisms between the countries. The Court of Justice of the European Union (CJEU) has already stated in similar cases that residents outside the Union cannot be discriminated against in these tax matters, as long as there are information mechanisms between countries.

According to the ruling, the US citizen will be able to amend her tax returns and deduct the expenses just like a European resident, as long as she meets the rest of the legal conditions. In addition, the court clarifies that there is no risk of the same expense being deducted twice, since there is tax information exchange between both countries.

If you are in a similar situation or have any dispute related to a housing lease, our professionals can analyze your case and take the most appropriate actions to defend your interests