UK-Spain Double Tax Treaty for STR Rental Income 2026 (Post-Brexit)

UK-Spain Double Tax Treaty for STR Rental Income 2026 (Post-Brexit)

You own a Costa del Sol villa, a Mallorca apartment or a Madrid pied-a-terre and you list it on Airbnb. As a UK tax resident you owe tax in two places: in Spain because the property sits there, and in the UK because HMRC taxes worldwide income on the arising basis. The 2013 UK-Spain Convention for the Avoidance of Double Taxation (replacing the 1976 instrument) prevents the double burden through the foreign tax credit method. This guide walks through art. 6 immovable property, art. 22 elimination, the post-Brexit changes to fiscal representation, HMRC SA106 and the Spanish Modelo 210.

The Convention between the United Kingdom and the Kingdom of Spain for the Avoidance of Double Taxation, signed on 14 March 2013 and in force since 12 June 2014, replaced the 1976 instrument and modernised the treatment of immovable property income, capital gains, dividends and pensions. It survived Brexit unchanged because it is a bilateral treaty independent of EU law. What Brexit did affect is the surrounding administrative framework: UK residents are now non-EU under Spanish IRNR law (24% withholding on gross, no expense deductions) and a fiscal representative in Spain is mandatory.

Article 6: Where Spanish Vacation Rental Income Is First Taxed

Article 6 of the 2013 UK-Spain Convention covers income from immovable property. The text follows the OECD Model: income derived by a resident of a Contracting State from immovable property situated in the other Contracting State may be taxed in that other State. In plain English, Spain has the primary right to tax Spanish vacation rental income, regardless of where the owner lives.

The article covers all forms of immovable property income: long-term rentals, short-term holiday lets, agricultural revenue, mineral and quarry rights. Income from a Marbella villa, a Sevilla townhouse or a Bilbao loft falls under art. 6. The fact that the booking is processed by Airbnb Ireland Unlimited Company, paid through Stripe and credited to a UK Halifax account does not change the source: the property is in Spain, the income is Spanish-source, primary taxing right belongs to Spain.

How Spain Taxes Non-Resident UK Rental Income

A UK tax resident is treated as a non-resident in Spain for IRNR (Impuesto sobre la Renta de no Residentes) purposes. The relevant statute is Real Decreto Legislativo 5/2004 (Texto Refundido de la Ley del IRNR), as amended through 2025. Two regimes apply depending on EU/EEA status:

• Pre-Brexit (until 31 December 2020): UK residents qualified as EU/EEA. They paid 19% on net rental income, with deduction of expenses (mortgage interest, IBI, comunidad fees, repairs, insurance, depreciation).
• Post-Brexit (from 1 January 2021): UK residents are non-EU. They pay 24% on gross rental income, no deductions allowed. Modelo 210 is filed quarterly. A fiscal representative in Spain is mandatory under art. 10 IRNR Law.

The post-Brexit shift is material. A UK owner with EUR 30,000 gross rental and EUR 12,000 expenses paid 19% on EUR 18,000 (EUR 3,420) before Brexit. After Brexit the same owner pays 24% on EUR 30,000 (EUR 7,200), more than double. Beyond IRNR, Spanish vacation rental income also triggers IBI (annual property tax, 0.4 to 1.1% of cadastral value), tasa basuras (waste tax) and in some municipalities a tasa turística (overnight tourist tax, EUR 0.45 to 4.00 per night depending on city and category).

How the UK Taxes the Same Income

HMRC taxes UK residents on worldwide income on the arising basis (the remittance basis was abolished from 6 April 2025 by the Finance Act 2025, replaced by the Foreign Income and Gains regime that exempts certain new arrivals for 4 years but does not help long-term residents). A UK resident landlord with a Spanish vacation rental declares the income on SA106 (foreign income pages) of the Self Assessment return.

The Furnished Holiday Letting (FHL) regime that previously applied to qualifying overseas holiday lets was abolished on 6 April 2025 by the Finance Act 2025. From tax year 2025-26 onwards all overseas property is reported as ordinary foreign property on SA106, with standard expense rules. Mortgage interest relief on overseas property is restricted to a 20% basic-rate tax credit, mirroring the UK domestic property regime under Section 24 Finance (No.2) Act 2015.

UK income tax bands for 2025-26: personal allowance GBP 12,570 (tapered to nil above GBP 125,140), basic rate 20% up to GBP 50,270, higher rate 40% up to GBP 125,140, additional rate 45% above. Scotland operates separate bands and rates.

Article 22: Elimination of Double Taxation Through the Credit Method

Without relief, a UK higher-rate owner with Spanish vacation rental income would pay 24% in Spain plus 40% in the UK on the same euro: an effective 64% combined burden. Article 22 of the 2013 Convention solves this through the credit method. Spain is the source state and gives no credit to UK residents. The UK is the residence state and gives credit against UK tax for the Spanish tax paid on the same income, capped at the UK tax that would otherwise be due on that income.

Practical sequence:

1. Pay Spanish IRNR via Modelo 210 quarterly (24% on gross for non-EU, paid by 20 April, 20 July, 20 October, 20 January).
2. Convert the Spanish tax paid into GBP at the HMRC monthly average rate (or spot rate at payment date).
3. Declare the gross Spanish income on SA106 in GBP at a consistent conversion convention.
4. Claim allowable UK expenses against the gross income (cleaning, agency fees, IBI, comunidad, insurance, mortgage interest as a 20% credit). The UK lets you deduct what Spain does not.
5. Enter the Spanish tax paid in box 2 of SA106 ("Foreign tax taken off or paid"). HMRC offsets the foreign tax credit against the UK tax computed on the Spanish-source income, capped at that UK tax.

Worked Example: Marbella Villa, UK Higher-Rate Owner

Numbers for tax year 2026 (Spanish quarterly Modelo 210 across calendar year 2025, UK SA Self Assessment for 2025-26 due 31 January 2027):

Line	EUR	GBP (at 1.18)	Notes
Gross rental income	45,000	38,136	140 nights at EUR 321 average
Spanish IRNR at 24% on gross (non-EU)	10,800	9,153	Final tax in Spain, no deductions
UK gross income (full 45k)	45,000	38,136	SA106 box 14, before deductions
UK allowable expenses (itemised)	11,000	9,322	Cleaning, agency, IBI, comunidad, insurance
UK net foreign property profit	34,000	28,814	Carried to SA106 summary
UK tax at 40% (higher rate)	n/a	11,526	Before foreign tax credit
Foreign tax credit (capped at UK tax)	n/a	9,153	Spanish IRNR in GBP
UK tax after credit	n/a	2,373	Net UK liability
Combined burden (Spain + UK)	n/a	11,526	Effective 30% on gross GBP income

Two points worth noting. First, the 24% Spanish rate on gross is so high that for most UK higher-rate owners it absorbs the entire UK tax liability. The foreign tax credit caps out at the UK tax on the same income, so any Spanish tax above that cap is lost. Second, if the same property had been in Italy or Portugal where the EU-resident style net taxation is more favourable, the combined burden would be 5 to 8 percentage points lower. Brexit has materially raised the cost of UK ownership of Spanish STR.

Modelo 210 Quarterly Reconciliation

Modelo 210 is the IRNR declaration filed by non-resident owners. It is quarterly for STR income (deadlines 20 April, 20 July, 20 October, 20 January) and annual for empty-property imputed rental income (filed by 31 December of the following year). Each quarter you declare:

• The property identification (cadastral reference, NRUA code)
• The gross income received in the quarter (from Airbnb, Booking, direct)
• The applicable rate (24% non-EU, 19% EU/EEA)
• The tax due, paid by SEPA debit or by Spanish bank transfer

The reconciliation HMRC sometimes asks for is between the Airbnb dashboard, the Spanish Modelo 210 quarterly filings and the SA106 annual figure. Discrepancies above 5% trigger an HMRC enquiry. Keep for at least 6 years: Airbnb yearly earnings summary, the four Modelo 210 receipts per year, IRNR payment proof, IBI annual statement, comunidad fee statements and a GBP conversion log line by line.

What the Treaty Does and Does Not Cover

The 2013 UK-Spain Convention covers income tax (UK Income Tax, Spanish IRPF and IRNR), corporation tax (UK CT, Spanish IS), capital gains tax (UK CGT, Spanish CGT under IRNR or IRPF) and inheritance tax (UK IHT, Spanish ISD partially). It does not cover VAT (Spanish IVA) or municipal taxes (IBI, basuras, tasa turística). The Spanish IBI on your Marbella villa is not creditable against UK tax under the treaty because IBI is a municipal property tax, not an income tax.

The Convention provides for mutual agreement procedures (art. 25) and exchange of information (art. 26). Both have been modernised by the 2017 OECD Multilateral Instrument that the UK and Spain signed and that takes effect on the bilateral relationship from 1 January 2022. The MLI added the principal purpose test and tightened the limitation on benefits.

Frequently Asked Questions

Do I need to file in both countries every year?

Yes. Spanish Modelo 210 quarterly across the year (or annually if no STR activity, at the imputed rental rate of 1.1% to 2% of cadastral value), and UK Self Assessment SA106 by 31 January (online) or 31 October (paper). Missing either deadline triggers separate penalties: from EUR 200 in Spain under art. 198 LGT, GBP 100 plus daily charges in the UK under FA 2009 Sch. 55.

Can I deduct Spanish expenses on the UK return even though Spain does not let me?

Yes. The UK and Spanish expense regimes are independent. UK SA106 follows UK rules: cleaning, agency commission, IBI, comunidad fees, repairs, insurance, mortgage interest (as a 20% credit only) are all deductible under HMRC rules even though Spain disallows them for non-EU owners. Document the expenses with invoices in case of an HMRC enquiry.

Does the treaty cover capital gains on selling the Spanish property?

Yes. Article 13 covers capital gains. Gains from the sale of immovable property situated in Spain are taxable in Spain (19% flat rate for non-residents under IRNR, on the net gain after acquisition cost, taxes paid on purchase, improvements and depreciation already deducted). The buyer withholds 3% under Modelo 211 and remits to AEAT. The seller files Modelo 210 capital gains within 4 months. The UK then gives a foreign tax credit under art. 22 against UK CGT (24% residential property rate from 30 October 2024 Budget for higher-rate taxpayers).

Can I rely on the EU-resident 19% rate if I keep dual UK and Irish citizenship?

Citizenship is irrelevant for IRNR. What matters is tax residency. If you are tax resident in Ireland (an EU member state) you qualify for the 19% net regime in Spain. If you are tax resident in the UK, even with an Irish passport, you face the 24% gross regime. Tax residency follows the OECD test in art. 4 of the relevant treaty: permanent home, centre of vital interests, habitual abode, nationality.

What about the Spanish wealth tax on the property?

Spain levies an Impuesto sobre el Patrimonio (wealth tax) on Spanish-situs assets held by non-residents above EUR 700,000 net. Some autonomous communities (Madrid) offer a 100% rebate, others (Catalonia, Valencia) do not. The 2013 UK-Spain Convention does not cover wealth tax. The UK does not levy a wealth tax, so no double taxation arises, but the Spanish bill can be substantial on Marbella properties above EUR 1m.

What if Airbnb already withholds tax?

Airbnb does not withhold Spanish IRNR on host payouts. It does report your gross receipts to AEAT under DAC7 (Real Decreto 117/2024) via Modelo 179. The withholding obligation remains on the host through Modelo 210. UK PAYE does not apply to foreign rental income, so you self-assess UK tax through Self Assessment.

Need help reconciling Airbnb dashboards with the four quarterly Modelo 210 filings and the annual UK SA106, computing the foreign tax credit cleanly and tracking the post-Brexit fiscal representative obligation? The Standard Package HostReady (Spain) includes a Modelo 210 quarterly calendar, a non-EU IRNR walkthrough for UK owners, an SA106 expense itemisation template and a GBP-EUR conversion log designed for owners filing in both jurisdictions.