The European Comission announced on Thursday the opening of an infringement procedure to Spain considering that it gives a "discriminatory tax treatment" to foreigners who rent their homes. For the time being, Brussels has sent a letter to the Government reminding it that Spanish legislation is a "restriction of the free movement of capital" within the European Economic Area. The community executive gives him a period of two months to adapt the rules. Otherwise, you can start a gear that could end with a complaint in the Court of Justice of the EU and sanctions.
Citizens or companies resident in Spain enjoy a general reduction of 60% for the net income obtained from renting a home for regular use when they make the income statement. However, that deduction is not applicable when the landlord is a person or a foreign investor. As reported by the European Commission today, Brussels considers that this exception is against the Treaty on the Functioning of the EU, which states that "all restrictions on the movement of capital between Member States and between Member States and third countries are prohibited".
The Commission has formally requested by letter to Spain that it eliminate this proviso by considering that "investors" from other countries are "subject to different treatment that unduly restricts the free movement of capital". The Commission warns that, if you do not act in two months, I could send you a reasoned opinion. Ultimately, the procedure may end in the Court of Luxembourg with sanctions.
The same thing can happen to you if you do not amend your legislation on the treatment of capital gains. Spanish legislation exempts, with conditions, from this tax transfers of shares to tax residents in Spain and other EU member countries. However, it leaves out Norway, Iceland and Liechtenstein, which are part of the European Economic Area. Brussels warns that this legislation similarly violates community treaties and gives Spain two months to amend its rules.