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Between 2019 and 2021, the number of Americans moving to Spain increased by 13%.1 It’s not hard to see why: with the reasonable cost of living, great weather, and rich culture, even technical aspects like taxes in Spain aren’t a deterrent.
Although there are advantages to living in Spain as an American, the move abroad does come with some tax complications. While a move to Spain is well worth the effort, it’s important to research and prepare beforehand. Below, we break down everything you need to know about filing taxes in Spain as a US expat. Let’s get started!
Snapshot of taxes in Spain
- Primary tax forms: Modelo 100
- Tax deadline: June 30
- Reporting website: Agencia Tributaria
- Administrative language(s): Spanish
- US Tax treaty: Yes
- Totalization agreement: Yes
Who qualifies as a tax resident in Spain?
Americans who are considered tax residents of Spain are typically subject to taxation on their worldwide income, and most will need to file a Spanish tax return.
Spanish tax residents are those who:
- Spend over 183 days per calendar year in Spain, OR
- Have financial interests located within the country, OR
- Have a Spanish spouse or dependent children.
Specific tax obligations can vary by visa, however.
Employee Visa
Who it’s for: Those who receive a job offer from a Spanish employer.
Tax breaks: None.
Highly-Skilled/Company Transfer Visa
Who it’s for: Those with specialized (especially technical) skills and employees of international companies who are transferring to Spain.
Tax breaks: None.
Self-Employed Work Visa
Who it’s for: Freelancers, independent contractors, and other self-employed individuals.
Tax breaks: None.
Spain’s Digital Nomad Visa
Who it’s for: Remote workers.
Tax breaks: The digital nomad visa in Spain comes with a flat rate of 24% on work-related income up to €600,000 (beyond that, you pay 48%). At least 80% of your income must come from outside of Spain, and as a digital nomad, you are exempt from the Spanish wealth tax.2
Study Visa
Who it’s for: Those who wish to study in Spain as well as participants of the popular North American Language and Culture Assistants Program (NALCAP).
Tax breaks: No income tax liability.
Au Pair Visa
Who it’s for: Young people ages 17-30 who find a host family willing to sponsor them.
Tax breaks: No income tax liability.
Family Reunification Visa
Who it’s for: Partners, spouses, children, and (under certain circumstances) parents of Spanish nationals.
Tax breaks: None.
Investor Visa (aka Golden Visa)
Who it’s for: Those who make a significant capital investment in Spain.
Tax breaks: No residency taxes if you spend less than 183 days in Spain; income is taxed at a rate between 17% and 50% depending on location.
Non-Working Residence Visa (aka Non-Lucrative Visa)
Who it’s for: Those with enough savings and/or passive income to support themselves financially without needing to work — especially popular among retirees.
Tax breaks: None.
Entrepreneur Visa
Who it’s for: Entrepreneurs and owners of innovative businesses looking to set up shop and create jobs in Spain.
Tax breaks: None.
What is the tax-governing authority in Spain?
Agencia Tributaria
Spain’s Agencia Estatal de Administración Tributaria (AEAT) — or just Agencia Tributaria — is responsible for informing the public about and assisting them with their tax obligations, administering and collecting taxes, detecting and regulating tax non-compliance, and prosecution related to certain offenses.
Tax Rates in Spain
General Taxable Income Rates
| Income (EUR) | Income (USD) | Tax Rate |
|---|---|---|
| €0 – €12,450 | ~$0 – $13,500 | 19% |
| €12,451 – €20,200 | ~$13,501 – $21,900 | 24% |
| €20,201 – €35,200 | ~$21,901 – $38,100 | 30% |
| €35,201 – €60,000 | ~$38,101 – $65,000 | 37% |
| €60,001 – €300,000 | ~$65,001 – $325,200 | 45% |
| €300,001+ | ~$325,201 + | 47% |
Savings Taxable Income Rates
| Income (EUR) | Income (USD) | Tax Rate |
|---|---|---|
| €0 – €6,000 | ~$0 – $6,500 | 19% |
| €6,001 – €50,000 | ~$6,501 – $54,200 | 21% |
| €50,001 – €200,000 | ~$54,201 – $216,800 | 23% |
| €200,001 – €300,000 | ~$216,801 – $325,200 | 27% |
| €300,001+ | ~$325,201 + | 28% |
Note: Exact tax rates may vary from one autonomous community to another.
Property Taxes in Spain
Those who own property in Spain must pay a local property tax called the Impuesto sobre Bienes Inmuebles (IBI). This tax ranges from .4% to 1.1% depending on which autonomous community it’s located in.
Purchases of newly-constructed properties incur a value-added tax of 10%, as well as an additional stamp duty tax of 1.5%.
Purchases of existing construction incur a property transfer tax called the Impuesto de Transmisiones Patrimoniales (ITP), which varies from 4% to 10% depending on location (although it can sometimes be circumvented).3
Capital Gains Tax in Spain
Capital gains generated from the transfer of assets are subject to unique tax rates:
| Value in Euros | Value in US Dollars | Tax Rate |
| €0 – €6,000 | ~$0 – $6,500 | 19% |
| €6,001 – €50,000 | ~$6,501 – $54,200 | 21% |
| €50,001 – €200,000 | ~$54,201 – $216,800 | 23% |
| €200,001+ | ~$216,801 + | 26% |
Payroll Tax in Spain
Spanish employers automatically withhold income taxes from their employee’s paychecks. However, self-employed individuals — called autónomos in Spain — have to make proactive quarterly estimated tax payments.
Do I have to pay social security in Spain?
The Spain/US Totalization Agreement prevents US expats in Spain from having to pay social security taxes to both the US and Spanish governments. Which government they pay social security to will depend on how long they intend to live in the country.
US expats who do have to pay Spanish social security taxes pay them in one of two ways:
- Employees have social security taxes automatically withheld from their paychecks at an average rate of 6.45%. From the 2023 tax year onward, this will also include an additional tax of .1% called the Mecanismo de Equidad Intergeneracional (MEI) that will help fund national pensions
- Autónomos have historically paid a flat rate for social security contributions (€294 as of tax year 2022), but starting in tax year 2023 they will pay between €230 and €5004 depending on their monthly income — an amount which will increase slightly each year until leveling off in 2031
Value-Added Tax (VAT) in Spain
VAT in Spain — the tax applied to most goods and services — is referred to as the Impuesto sobre el Valor Añadido/Agregado, or IVA. The standard rate is 21%, although discounted rates apply to certain goods and services:
- 10% IVA: Certain foods, water bills, certain medical goods, domestic travel by road or rail, hotel accommodation, bars, etc.
- 4% IVA: Certain foods, certain medical goods, newspapers, social services, etc.
- 0% IVA: Gold, sea/air travel
The IVA is typically factored into the price of goods you see displayed in stores — elsewhere, it usually shows up as a separate line item on the bill.
It’s worth noting that autónomos must include the IVA when billing their clients and pass that income along to the government.
Other Spanish Tax & Reporting Obligations
Additional Spanish taxes and/or reporting requirements besides the ones listed above may be incurred by things like foreign assets, investment and dividends income, and inheritance or gifts, among others. If you’re ever uncertain about your obligations, make sure to contact a Spanish tax expert.
Do US expats living in Spain also have to file US taxes?
Due to the US’s citizenship-based taxation system, any American citizen or permanent resident who meets the minimum income reporting threshold must file a US tax return, regardless of where in the world they reside. Americans abroad get an automatic two-month filing extension until June 15th which can be extended further to October 15th. However, any tax owed is still due on April 15th.
Does Spain have a tax treaty with the US?
Spain does have a tax treaty with the US that, in theory, prevents double taxation. However, the benefits are limited due to the Savings Clause, which allows the US government to act as if the treaty didn’t exist. Most Americans in Spain are better off claiming one or more of the tax breaks mentioned below.
Common tax deductions available for expats in Spain
Many US expats avoid the issue of navigating foreign and US tax filing because they’re worried about being double-taxed. While the idea of having to pay taxes on the same income to two different governments might sound frightening, the reality is that most expats can avoid it by claiming tax breaks. In some cases, strategic filing as an expat can even result in receiving a substantial amount of money from the IRS.
Foreign Tax Credit (FTC)
The FTC provides Americans abroad with dollar-for-dollar credits on any taxes paid to a foreign government (provided that the taxes are legal, paid, made in your name, and based on income), which can then be used to offset US tax bills.
Foreign Earned Income Exclusion (FEIE)
The FEIE allows Americans abroad to exclude a certain amount of their earned income from taxation ($112,000 for tax year 2022, and $120,000 for tax year 2023). Those who qualify for the FEIE also qualify for the Foreign Housing Exclusion or Deduction, which allows you to write off the cost of qualifying housing expenses like rent, utilities, necessary repairs, and more. To be eligible, you must meet at least one of two tests.
Physical Presence Test
Requires Americans to have been outside of the US for 330 days in a 365-day period.
Bona Fide Residence Test
Requires Americans to prove foreign residency for at least one calendar year, supported through official documentation like residency cards, foreign tax receipts, rental contracts, etc.
Child Tax Credit (CTC)
The Child Tax Credit offers all US taxpayers a partially-refundable tax credit of up to $2,000 per qualifying child, provided that they meet the basic criteria. However, when filing for the 2022 tax year in 2023, most expat parents can expect to receive a partial refund of up to $1,500 per qualifying child due to common international tax filing circumstances.
Understanding how to qualify for (and even retroactively claim) the CTC can be complicated, especially when bearing in mind the brief changes that accompanied the American Rescue Plan Legislation in 2021. We’ve got all of this covered and more in our complete guide to the Child Tax Credit.
Tax implications of renting out your US residence while in Spain
Americans who move to Spain but own property in the US often choose to rent it out. If you do this, just make sure to report any relevant income/expenses associated with the rental of the property via Schedule E.
Note: Because this income is considered passive US-sourced income, you cannot exclude it via the FEIE
Rental income while living in Spain: Frequently asked questions
If I own a rental property in the US or outside of Spain, do I have to report it to the Spanish tax office?
US expats residing in Spain are subject to taxation on worldwide income, so they do need to report rental income from foreign properties.
Which country do I pay taxes to on my rental property income?
Americans living in Spain are technically subject to taxation on rental income by both governments. However, they can often avoid double taxation by claiming one of the tax breaks mentioned above.
US expats living in Spain may need to file an FBAR or Form 8938
US expats with a total of at least $10,000 in one or more foreign accounts at any time during the tax year must file FinCEN form 114, otherwise known as a Foreign Bank Account Report (FBAR). Meanwhile, Americans owning foreign assets valued at a combined total of over $200,000 on the last day of the tax year — or $300,000 at any point during the year — may need to file Form 8938.
Getting caught up on your US taxes with the Streamlined Procedure
The good news for those behind on their US tax returns is that the IRS offers a voluntary amnesty program called the Streamlined Procedure that allows expats who non-willfully fell behind on their taxes to catch up without additional fees or penalties. To do so, they must file their last three tax returns, six FBARs (if applicable), and include a statement confirming that their previous failure to comply was unintentional.
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