TEAC Decision: New Requirements for Foreign Professionals
In 2025, the Central Economic-Administrative Court of Spain (TEAC) clarified an issue that had long been a source of debate among foreigners who moved to the country for work. Now, professionals who have used the special tax regime for impatriates are required to declare income from their urban property, even if it is their primary residence.
Features of the Impatriate Regime
This tax regime was created to attract qualified professionals from abroad. It allows new residents to pay taxes under rules different from those for Spanish citizens. However, as TEAC clarified, the advantages are accompanied by additional obligations. In particular, apartment and house owners must declare so-called “imputed income” from their property, even if they live there themselves and do not receive actual profit from it.
What Is Imputed Income and How Is It Calculated?
Imputed income is the amount that tax authorities deem as the property owner’s potential profit, regardless of whether the property is actually rented out. To calculate it, a certain percentage of the cadastral value is used. If there is no cadastral value, an alternative base is applied, based on the purchase price or an administrative assessment.
Differences Compared to the General Taxation Regime
Under the standard tax system for Spanish residents, a primary residence is exempt from imputed income. However, this rule does not apply to participants in the impatriate regime. The TEAC emphasized that the exception for a main home applies only to the general system, not to the special regime for foreigners.
Practical implications for taxpayers
The new TEAC clarification requires foreign professionals to carefully analyze their tax situation. Before choosing a regime, it is important to weigh not only potential benefits but also additional expenses linked to property ownership. In some cases, switching to the general system may prove more advantageous when all factors are taken into account.
Common misconceptions among impatriates
Among foreigners relocating to Spain, misconceptions about property taxation are frequent. For instance, many believe that working from home exempts them from imputed income, but this is not the case: the space must be used exclusively for business to qualify for the benefit. Another common mistake is to think that the absence of a cadastral value removes the tax obligation — in this scenario, a different calculation method is applied.
Another common misconception concerns property ownership: if an apartment is registered to one person while another has the right of lifetime residence, only the person who actually uses the property is liable for the tax. Tenants who are not owners are not required to declare imputed income at their place of residence.
Finally, expenses related to housing, such as mortgage payments, utilities, or insurance, do not reduce the amount of imputed income—the tax is calculated according to an established formula without taking these costs into account.
Conclusions for foreign professionals
The TEAC decision highlights the importance of careful tax planning for anyone considering a move to Spain for work. Before choosing a tax regime, it is essential to thoroughly study all obligations to avoid unexpected expenses and penalties.
