The European Commission has given two months to Spain to modify his tax law and eliminate existing discriminatory treatment regarding the taxation of long-term rental income between residents and non-residents in Spanish territory.

Rental income providing from a rental property which is the habitual abode for the tenant has a 60% reduction. That means only the 40% of the net income received by the landlord will be taxed.

However, this reduction only applies for residents in Spain. Individuals who rent a property in Spain, which is the primary residence of the tenant, living abroad cannot benefit of this reduction.

The European Commission has considered the different treatment between residents and non residents in Spain against the principle of free movement of capital establish in the article 63. Brussels has required to Spain to modify his law.

 The Spanish Government has now two months to months to change the law. Otherwise the European Commission will impose a penalty to Spain and ask the European Court of Justice to act.