On July 28, 2025, the National Court of Spain issued a ruling that could significantly impact residents in Andorra who rent out properties in Spain.
Until now, only EU and EEA residents could deduct rental expenses. Residents in Andorra were excluded and treated unfairly for tax purposes.
The court has confirmed that this restriction goes against the EU principle of free capital movement. This means tax residents in Andorra can now deduct these expenses when filing the Non-Resident Income Tax (IRNR).
This change also allows you to review past tax returns and claim any overpaid amounts.
The ruling does not yet cover the higher tax rate for non-EU residents (24%) compared to 19% for EU/EEA residents. Still, it’s an important step that could have practical implications for many Andorran taxpayers.
It remains to be seen whether the State Attorney’s Office will appeal to the Spanish Supreme Court. Meanwhile, the ruling reinforces that this kind of tax discrimination should not continue.
If you are a tax resident in Andorra with rental properties in Spain, now is a good time to review your situation and see if you can adjust past returns or claim refunds.
At addwill, we will continue to monitor any relevant developments. If you’d like professional advice, get in touch via our form.