Key takeaways
- Moving to Spain does not end your US filing obligation, because the United States taxes citizens and green card holders on worldwide income wherever they live.
- A Spanish tax resident is generally taxed on worldwide income at progressive rates, and may also owe wealth tax.
- The US–Spain income tax treaty and the separate US–Spain social security agreement solve different problems, and most people need both.
- Spanish accounts usually trigger US reporting (FBAR, often Form 8938), and US assets usually trigger Spanish reporting (Modelo 720, Modelo 721).
- Spanish funds, pension plans and companies can be treated very differently by the IRS than by the Spanish tax agency.
Do Americans living in Spain still file US taxes?
Yes. The US uses citizenship-based taxation: citizens and US tax residents, including green card holders, generally report worldwide income to the IRS wherever they live. Spain taxes on the basis of residence. You can be fully taxable in both countries at once; the treaty and credit rules reduce the overlap but do not remove the US return.
Filing thresholds. For tax year 2025, the standard deduction after the One Big Beautiful Bill Act is $15,750 (single or married filing separately), $31,500 (married filing jointly) and $23,625 (head of household) (IRS IR-2025-103; Publication 501). For 2026 it is $16,100, $32,200 and $24,150 (Rev. Proc. 2025-32). These amounts are indexed annually. You generally must file regardless of these amounts if you have $400 or more of net self-employment earnings, or $5 of gross income when married filing separately (Publication 501).
Deadlines for tax year 2025. The regular due date was April 15, 2026. Citizens and residents living abroad get an automatic two-month extension to June 15 to file and pay, but interest runs from April 15 and a statement must be attached (IRS). Form 4868 extends the time to file, not to pay, to October 15, 2026. A further discretionary extension to December 15 can be requested by letter (Publication 54).
When does Spain treat you as a tax resident, and what does it tax?
Tax residency is not immigration status. A visa, TIE card or padrón registration neither makes you a Spanish tax resident nor prevents it. Under Article 9 of Ley 35/2006 (the IRPF law), you are resident for a calendar year if any of these applies:
- you spend more than 183 days in Spain in the year, counting sporadic absences unless you prove tax residence elsewhere;
- the main core or base of your business or economic interests is in Spain;
- your spouse (not legally separated) and dependent minor children habitually live in Spain, which creates a rebuttable presumption.
When residency starts. The tax period is the calendar year (Art. 12), and the law contains no split-year rule. Someone who arrives in June and passes the 183-day test is generally taxable on worldwide income for the whole year, which can include income earned before arrival. The treaty tie-breaker (below) may change that result for the pre-move period.
What Spain taxes. The charging provision, Article 2, defines the object of the tax as the taxpayer's total income "con independencia del lugar donde se hubiesen producido y cualquiera que sea la residencia del pagador" (regardless of where it arose or where the payer resides). Residents are therefore taxed on worldwide income; there is no remittance basis.
Rates (2025). Wages, business income, pensions and rents form the general base, taxed on a state scale of 9.5% to 24.5% (Art. 63) plus a regional scale set by each autonomous community, so the combined top rate depends on where you live. Interest, dividends and gains form the savings base, taxed at combined rates of 19%, 21%, 23%, 27% and 30%, with bands at €6,000, €50,000, €200,000 and €300,000; the 30% band was added by Ley 7/2024 from January 1, 2025 (AEAT). No change to the 2026 savings scale was found.
Wealth taxes. Residents are subject to wealth tax on worldwide net assets (Ley 19/1991), with the main home exempt up to €300,000 and a €700,000 exempt minimum unless the region sets another. Regions also grant rebates. A solidarity tax on large fortunes (Ley 38/2022) applies above €3,000,000; Real Decreto-ley 8/2023 extended it until wealth taxation is reviewed, and it applied for 2025 (Orden HAC/652/2026) — whether the same holds for 2026 was not confirmed. Neither is an income tax or covered by the treaty.
Local filing. The 2025 campaign ran from April 8 to June 30, 2026 (AEAT). Taxpayers with only employment income up to €22,000 from one payer are generally exempt from filing (€15,876 in some cases, such as several payers). Americans with foreign income or investments will usually file.
The Beckham regime. Article 93, as amended by Ley 28/2022 from 2023, lets qualifying newcomers be taxed as non-residents for the year of arrival and the next five years. Conditions include no Spanish residence in the previous five years, a qualifying reason for the move (a Spanish job, an employer transfer, remote work including under the international telework visa, certain director roles, or qualifying entrepreneurial or highly qualified work) and an election on Modelo 149 within six months of starting activity. Employment income is taxed at 24% up to €600,000 and 47% above, and savings income at 19% to 30%. All employment income under the regime is treated as Spanish-source, but most other foreign income is not taxed in Spain, and regime taxpayers do not file Modelo 720 (AEAT). Less Spanish tax means less to credit against US tax. Whether a regime taxpayer is a Spanish resident for treaty purposes is a separate question that should be confirmed with an adviser.
Administrative guidance. Binding rulings from the Dirección General de Tributos (DGT) shape how the statute is applied. In V0251-25 (March 2025), the DGT treated payouts from a US employer retirement plan to a Spanish resident as employment income, and a direct rollover to another US plan as not taxable while the money is never received — this guide relies on a third-party copy of the ruling rather than the DGT's own text. A 2020 DGT resolution sets the tests for treating foreign entities as transparent (BOE-A-2020-2108).
Is there a US–Spain tax treaty?
Yes. It was signed on February 22, 1990, entered into force on November 21, 1990, and is generally effective from January 1, 1991 (IRS Table 3; BOE). A protocol signed on January 14, 2013 entered into force on November 27, 2019, applying to withholding taxes on amounts paid from that date and to other taxes for periods beginning on or after it (Protocol Art. XV).
- Art. 1, saving clause. Paragraph 3 lets the US tax its citizens and residents as if the treaty did not exist. Paragraph 4 carves out Articles 9(2), 20(4), 24, 25 and 26 for everyone, and Articles 21, 22 and 28 only for people who are neither citizens nor green card holders. For a US citizen in Spain, the treaty's main value is the relief article.
- Art. 2, taxes covered. On the Spanish side, the IRPF and corporate tax. Wealth tax and social contributions are not covered.
- Art. 4, residence. Paragraph 2 breaks ties: permanent home, then center of vital interests, habitual abode, nationality, and finally mutual agreement.
- Arts. 10, 11 and 13, as amended. Dividends are capped at 15% at source, with lower rates for certain corporate holders and pension funds. Interest is generally taxable only where the recipient resides. Most gains other than on real property are taxable only in the seller's country of residence.
- Art. 20, pensions. Social security benefits may be taxed by the paying country. The AEAT leaflet states that private pensions paid to Spanish residents are taxed only in Spain; the saving clause still lets the US tax its citizens.
- Art. 24, relief. The US credits Spanish income tax under US law. According to the AEAT leaflet, Spain does not credit US tax imposed solely because of citizenship, only US tax the US could have charged on other grounds.
How do you avoid paying tax twice?
The Foreign Earned Income Exclusion (Form 2555) excludes up to $130,000 of foreign earned income for 2025 and $132,900 for 2026 (Rev. Proc. 2024-40; Rev. Proc. 2025-32; indexed annually), plus a possible housing exclusion. It covers earned income only. It does not reduce self-employment tax: Publication 54 says self-employment income counts "even income that is exempt from income tax because of the foreign earned income exclusion." And Spanish tax on excluded income cannot also be credited.
The foreign tax credit (Form 1116) offsets US tax on foreign-source income with Spanish income tax, computed separately by category, mainly general (wages, business income) and passive (most interest and dividends). Unused credits generally carry back one year and forward ten (Form 1116 instructions; Publication 514).
Which tends to fit. Spanish rates on employment income are often at or above US effective rates, so for many employees the credit eliminates US tax on Spanish wages and builds carryovers, which the exclusion cannot do. The exclusion tends to fit where Spanish tax is low, such as under the Beckham regime or before Spanish residency begins. Revoking an exclusion election has consequences, so model both before choosing.
Passive income. Because of the saving clause and Spain's refusal to credit citizenship-based US tax (AEAT leaflet), US-source dividends and interest of a US citizen in Spain can be taxed by both countries without full relief. The exact mechanics of how the treaty's relief and re-sourcing rules apply to this situation were not confirmed in the primary treaty text.
Timing. Spain's tax year is the calendar year, so there is no year-end mismatch. Cash-basis taxpayers can elect to claim foreign taxes when they accrue; the election then applies to later years (Publication 514).
Social security: will you pay both?
This is governed by a separate instrument, the US–Spain totalization agreement, effective April 1, 1988 (SSA). The income tax treaty does not cover contributions.
- Employees are generally covered only where they work (Art. 4(1)). An employee sent to Spain by a US employer can stay in US Social Security if the assignment is not expected to exceed five years, with one possible extension of up to a year (Art. 5(1)). The employer requests a US certificate of coverage from SSA online.
- The self-employed are generally covered only by their country of residence (Art. 4(2)). A self-employed American living in Spain therefore pays into Spain's RETA system, not US self-employment tax, but generally needs a Spanish certificate of coverage from the TGSS provincial office to claim the US exemption (SSA pamphlet). Without it, the IRS may assess US self-employment tax as well.
- RETA contributions have been income-based since 2023 (Real Decreto-ley 13/2022). New autónomos can generally pay €80 a month for the first 12 months. Monthly bases run from €653.59 to a maximum of €4,909.50 in 2025 and €5,101.20 in 2026 (Seguridad Social).
- Benefits. Credits in both systems can be combined to qualify where you fall short in one.
Pending change. A new agreement was signed on April 8, 2024, which would extend detachment rules to the self-employed (Spanish Ministry of Inclusion). Whether it has since entered into force was not confirmed.
Which US forms apply to accounts and assets in Spain?
- FBAR (FinCEN Form 114): generally required if your foreign accounts together exceed $10,000 at any time in the year; due April 15, automatically extended to October 15 (FinCEN). Not indexed.
- Form 8938: for taxpayers living abroad, foreign financial assets over $200,000 at year-end or $300,000 at any time (single), or $400,000 and $600,000 (married filing jointly) (Form 8938 instructions). It is separate from the FBAR.
- FATCA and CRS. Spain signed a Model 1 FATCA agreement on May 14, 2013 (BOE, July 1, 2014), so Spanish banks identify US account holders and report them via the AEAT to the IRS. Spain also participates in the OECD Common Reporting Standard, with first exchanges in 2017.
Spain's reporting of your US assets. Residents file Modelo 720 between January 1 and March 31 when a category of foreign assets (accounts; securities and insurance; real estate) exceeds €50,000, and again when a category grows by more than €20,000 (AEAT). The EU Court of Justice found the original penalties disproportionate (Case C-788/19, January 27, 2022), and Ley 5/2022 amended them. Modelo 721 covers crypto held abroad above €50,000 (from 2023). Your US brokerage and retirement accounts count as foreign assets.
Local pensions, retirement accounts and investment funds
US plans while in Spain. Spain does not follow US deferral on its own terms. A DGT ruling (known to this guide only through a third-party copy) treated US employer plan payouts to a Spanish resident as employment income, and under Art. 20 Spain claims taxing rights over private pensions paid to its residents. No primary source settles Spain's treatment of Roth accounts; advisers disagree on whether, and how much, Spain taxes Roth distributions.
Spanish pension plans (planes de pensiones). Contributions reduce the Spanish general base up to €1,500 a year, capped at 30% of net earned income, with up to €8,500 more for employer contributions (AEAT Manual 2025). The US does not automatically follow, and the IRS has not addressed Spanish plans specifically. Rev. Proc. 2020-17 exempts certain tax-favored foreign retirement trusts from Forms 3520 and 3520-A if conditions are met, including local tax-favored status, annual reporting to the local authority, contribution limits (for example $50,000 a year) and withdrawals tied to retirement, disability or death. Check each plan against every condition. FBAR and Form 8938 still apply.
Spanish funds and ETFs. A non-US fund is generally a PFIC if 75% of its income is passive or 50% of its assets produce passive income (26 U.S.C. §1297), which most fondos de inversión and EU ETFs are expected to meet. PFICs require Form 8621 and carry punitive default rules. Spain's tax-free fund switches (traspasos, Art. 94) have no US equivalent; a switch is generally a taxable sale for US purposes.
Running a business or company in Spain
Classification first. A Sociedad Anónima (S.A.) is on the per se corporation list in Treas. Reg. §301.7701-2(b)(8), so it is always a corporation for US purposes — confirmed here via a Cornell Law School reproduction of the regulation rather than the official eCFR text. A Sociedad Limitada (S.L.) is not on the list: it defaults to corporate status because its owners have limited liability, and can generally elect otherwise on Form 8832.
If it is a corporation and US shareholders owning 10% or more together hold more than half, it is likely a controlled foreign corporation, with Form 5471 and possibly Form 8992. The One Big Beautiful Bill Act renamed GILTI "net CFC tested income" (NCTI) for tax years beginning after December 31, 2025, and set the section 250 deduction at 40% (P.L. 119-21). Individuals generally lack that deduction unless they make a section 962 election; exactly how that election would interact with NCTI for a sole owner was not confirmed. If an S.L. elects to be disregarded, its income flows to your return with Form 8858, while Spain still taxes the company.
Sole proprietors (autónomos) report on Schedule C and handle self-employment tax through the totalization rules above. US LLCs used from Spain are tested under Spain's own transparency criteria; how Spain classifies a given US LLC owned by a resident is not settled in a primary source found, and a mismatch can deny credits on both sides.
Buying, renting and selling property
- US side of a home sale. Section 121 excludes up to $250,000 of gain ($500,000 for most joint filers) if you owned and used the home as your main residence for two of the last five years (IRS Topic 701); the statute has no US-location requirement. Gain is measured in dollars.
- Spanish side. Gains are generally exempt if reinvested in a new main home within two years (per a copy of a DGT ruling, not the DGT's own site), or for sellers over 65 selling a main home of at least three years (AEAT). Otherwise they fall in the savings base.
- Euro mortgage. Section 988(e) keeps personal transactions outside section 988. Case law (Quijano v. United States, 1st Cir. 1996) is generally cited for taxing a gain on repaying a foreign-currency home mortgage while disallowing a loss, though this guide did not confirm that reading against the opinion itself.
- Buying from a non-resident. The buyer generally withholds 3% of the price and pays it on Modelo 211 within one month (AEAT).
- Rentals. Spain allows a 50% reduction of net residential rental income for leases from May 26, 2023, rising to 60%, 70% or 90% in specific cases; earlier leases keep 60% (AEAT Manual 2025). An unrented second home generates imputed income of 2% of cadastral value, or 1.1% in some cases. On the US side, report rentals on Schedule E with US depreciation; Spanish tax on that income is generally creditable, but imputed income has no US counterpart.
Employment, equity compensation and remote work for a US employer
Wages are generally sourced where the work is physically performed (Publication 54), so work done in Spain is foreign-source even if paid into a US account. A US employer will usually keep withholding US income tax unless told otherwise, while Spain expects income tax on the same wages, and a non-detached employee working in Spain generally falls into Spanish social security. A US employer with no Spanish presence may need to register locally or use an employer-of-record arrangement, though this guide did not confirm the specifics against a primary Spanish source.
RSUs and options vesting while you live in Spain are generally taxed there as employment income. The US generally sources such pay by working days in each country between grant and vesting, though this guide did not confirm that rule against a primary source for this situation, so timing mismatches can strand credits. Keep a work-location log.
Leaving Spain
Spanish exit tax (Art. 95 bis). A person resident in at least 10 of the previous 15 years can be taxed on unrealized share gains on departure if their holdings exceed €4,000,000, or a stake above 25% is worth over €1,000,000 (AEAT). Deferral or refund is available in some cases, such as moves within the EU/EEA, temporary work moves or a return to Spain — this guide relies on a secondary summary of those exceptions, not the statute text itself. Beckham years generally do not count toward the ten. Income pending recognition generally goes on your final Spanish return (Art. 14.3).
US side. Leaving Spain changes nothing for the IRS. Only renouncing citizenship or abandoning a green card does, which can trigger the expatriation regime and Form 8854; this guide did not research the specific covered-expatriate thresholds.
Mistakes Americans commonly make in Spain
- Assuming income from earlier in the arrival year is safe, when Spain has no split year.
- Missing Modelo 720 on US brokerage, bank or retirement balances above €50,000 per category.
- Buying Spanish funds without considering PFIC rules, or treating a traspaso as tax-free in the US.
- Paying both RETA and US self-employment tax for lack of a Spanish certificate of coverage.
- Claiming the exclusion by default and stranding creditable Spanish tax.
- Assuming the treaty shelters US dividends or Roth withdrawals from Spanish tax.
- Forming an S.L. without checking its US classification and NCTI exposure.
- Ignoring regional rules, especially for wealth tax.
Checklist
Before moving: test Beckham eligibility and diary the six-month Modelo 149 deadline; review US funds, retirement and Roth accounts with a cross-border adviser; ask a US employer about a certificate of coverage; hold off on Spanish funds.
First 90 days: obtain your NIE; register with Spanish social security if working; open accounts and expect FATCA questions; if self-employed, register as autónomo and request a Spanish certificate of coverage; start a day-count log.
Every year: US return (April 15, June 15 if abroad, October 15 with Form 4868); FBAR; Form 8938 if required; Modelo 720 and 721 by March 31; IRPF and any wealth tax return in the spring campaign; Forms 8621, 5471 or 3520 as applicable.
Before leaving: check the exit tax and final-year return; keep records; confirm the US treatment of any Spanish pension left behind.
Frequently asked questions
Do I have to pay US taxes if I live in Spain? You generally must file; whether you owe depends on credits and exclusions, and many employees owe little once Spanish tax is credited.
Does Spain tax my US Social Security? The US may tax it under Art. 20(1)(b). Per the AEAT leaflet, Spain can also tax it and relieves only US tax not based on citizenship.
Is my 401(k) or IRA taxed in Spain? Distributions to Spanish residents are generally taxable in Spain; a DGT ruling treated US employer plan payouts as employment income.
Do Americans in Spain need to file Modelo 720? Residents with more than €50,000 in a category of foreign assets generally do; Beckham regime taxpayers do not.
Can a US remote worker use the Beckham law? Possibly, including on the international telework visa, if Article 93's conditions are met and the election is made within six months.
Do freelancers in Spain pay US and Spanish social security? Generally not both: the agreement assigns self-employed Spanish residents to Spain, but you need the certificate to prove it.
When to hire a professional
- The year you move: a US CPA or enrolled agent experienced with Spain, working with a Spanish asesor fiscal.
- Beckham regime, wealth tax or exit tax: a Spanish tax adviser or abogado tributarista.
- Owning an S.L.: a US international tax specialist for classification and Forms 5471/8992, plus a Spanish gestoría.
- PFICs or late FBAR/Form 8938 filings: a US international tax specialist familiar with IRS compliance programs.
- Retirement drawdown: a cross-border financial planner working with both tax advisers.
Sources
Accessed October 11, 2026.
For questions about your own situation, such as whether the Beckham regime fits, how to treat a particular pension or fund, or how to sequence credits, you can work through the details with the TaxLatitude assistant and bring its research to a qualified adviser.
This guide is educational and is not personalized tax advice.