Paying taxes properly when moving to Spain from the US is something that needs to be done but is never anything fun. In a nutshell, if you are living and/or working in Spain, you’re expected to file a Spanish tax return and pay income taxes in Spain on both your income and assets.
However, whether you pay taxes on your “worldwide income” as in, if you’re still earning additional money stateside as well as in Spain, will be determined by your residency status.
Here are the criteria you must meet to pay taxes in Spain—which, if you’re moving to Spain, you’ll likely meet:
- You must be present in Spain for more than 183 days during a calendar year. If there are several absences, you must prove that you’re a tax resident elsewhere.
- You’re involved in business ownership or other economic interests in Spain.
- Your spouse and/or underage children are domiciled in Spain
Taxes apply on a progressive scale in Spain, however, deductions do exist. This comes in handy considering that residents of Spain must pay Spanish tax on their worldwide income. For non-residents, you will only have to pay your taxes on your Spanish income (if you have an income while in Spain) and at a flat rate.
This would include any potential income that comes from your property, even if you don’t rent it out. Beyond property ownership, Spanish tax also applies to investment interests as well as goods and services.
The taxes in Spain are also split between state and regional governments, which means that your Spanish tax rates can and will vary across the country for the following:
- Income tax
- Property tax
- Wealth tax
- Capital gains tax
- Inheritance tax
Moreover, if you work in Spain you must also contribute to Spanish social security taxes.
Lastly, the US and Spain have a tax treaty so that expats can avoid paying double tax while living abroad. It’s also to help expats avoid paying taxes to the wrong country. This treaty can be a bit difficult to navigate, as taxes in Spain, in general. It’s best to consult with tax professionals to understand which requirements you meet and to ensure you’re paying the right type of taxes and in the right amounts.
At Avalanding we handle hundreds of tax filings for American expats every year and we would be happy to support you with navigating this as well. A properly planned tax strategy makes sure you are not paying more than is absolutely necessary.
Moving to Spain from the US can be an exciting adventure, especially if you plan to take advantage of everything the country has to offer. Once you figure out where to live, the type of residency you need, and the taxes you’ll have to pay, you’ll be well on your way to living the easy life you’ve always dreamed of in one of the most exceptional countries in the world.
And we can help you with ALL of that!
If you’re thinking about relocating to Spain from the US, we have an entire team of experienced lawyers, economists, relocation specialists, accountants, and real estate professionals to guide you through it all.