Morocco-Based Landlords in Spain Face Higher Taxes Than French Residents

For the same apartment rented out for 1,000 euros a month in Spain, a landlord residing in Morocco may pay 2,880 euros in tax per year, compared with just 1,520 euros for a landlord who is tax-resident in France, assuming 4,000 euros in deductible expenses. That is a difference of 1,360 euros on identical rental income. This difference, set out in Spanish law, could be challenged by the Supreme Court, which has agreed to hear an appeal against the rules applied to landlords living outside the European Union.

The information, reported on Wednesday, 14 October by the daily El País, directly concerns Moroccans who own rental property in Spain while maintaining tax residence in Morocco.

Currently, the Spanish tax authorities apply a rate of 19% to rental income earned by landlords residing in the European Union or certain countries in the European Economic Area. These taxpayers can also deduct expenses directly related to the rental: loan interest, property tax, condominium fees, maintenance costs and certain repairs.

For landlords residing in Morocco, the tax regime is far less favourable. The rate rises to 24%, and, more importantly, tax is calculated on the total rent received. Even when they incur significant expenses to maintain their property, these taxpayers cannot deduct them from their taxable rental income.

It is precisely this ban that an American property owner is challenging in the case currently before the Spanish courts.

An American landlord could change the rules for Moroccans

The case concerns an apartment in Barcelona whose owner lives in the United States. The Spanish tax authorities had demanded 5 073,79 euros from her for 2016, then 4 378,40 euros for 2017 and 3 959,20 euros for 2018.

The taxpayer challenged these amounts. She argued that she should be able to deduct her mortgage interest, condominium fees, Spanish property tax and other expenses necessary to rent out the property. The tax authorities rejected her request on the grounds that she lived outside the European Union.

But Spain’s National Court ruled in her favour. The judges found that this difference in treatment could infringe the European principle of the free movement of capital, which also protects certain investments made between the European Union and third countries.

The Spanish government challenged this interpretation. In an order dated 15 July 2026, the Supreme Court agreed to hear its appeal, registered under number 6741/2025. The judges will have to determine whether Spain can continue to bar these deductions for landlords residing outside the European Union.

The tax authorities still have a legal argument: a clause in European law allows certain restrictions on capital movements with third countries to remain in place if they existed before 31 December 1993. The Supreme Court will have to determine whether Spanish property taxation can benefit from this exception.

The case could affect many foreign investors. Moroccans are among the active buyers in Spain’s property market, particularly in major cities and tourist areas. Those who are tax-resident in Morocco are subject to the contested regime, unlike Moroccan nationals who are tax-resident in France, Belgium or the Netherlands.

The European Commission has also been looking into this difference in treatment for several years. Infringement proceedings opened against Spain in 2019 are still ongoing, while Moroccan landlords had already been warned about tax inequalities in 2025. The case could even lead the Supreme Court to refer questions to the Court of Justice of the European Union.

The expected ruling will initially concern the right to deduct rental-related expenses. It will therefore not automatically eliminate the difference between the 19% and 24% rates. But if the judges rule in favour of the American property owner, taxpayers residing in Morocco could gain an additional legal argument to challenge how their rental income is taxed in Spain.