💸 Do US Citizens Have to Pay Taxes in Spain?

As an American considering moving to Spain, you’re probably wondering: Will I have to pay taxes to two countries?

The short answer is: It depends entirely on your tax residency status. Because the U.S. taxes its citizens on their worldwide income regardless of where they live, you will always have a U.S. filing requirement. However, your Spanish tax obligations—and how you avoid double taxation—are defined by your residency. Here’s exactly how US citizens are taxed in Spain.

🔵 The Key Concept – Tax Residency

Tax residency is the single most important factor that determines your tax liability in Spain. It is a question of fact, not of immigration status (a visa/residence card does not automatically make you a tax resident).

What Determines if You’re a Tax Resident in Spain?

You are considered a Spanish tax resident if you meet any of the following criteria within a single calendar year (January 1 to December 31):

1. The 183-Day Rule: You spend more than 183 days in Spanish territory during the calendar year. These days do not need to be consecutive, and temporary absences are counted as days in Spain unless you can prove tax residency in another country.
2. Center of Vital Interests (Economic): The main core or base of your economic interests is located in Spain (e.g., your primary source of income or business is here).
3. Family Presumption (Personal): Your non-legally separated spouse and/or dependent minor children habitually reside in Spain. This creates a legal presumption that you are also a tax resident.

CRUCIAL Difference: Residents vs. Non-Residents

🔵 Scenario 1 – You ARE a Tax Resident in Spain

If you meet any of the three criteria above, you are a Spanish tax resident.

Worldwide Income Principle: Spain Taxes Your Global Income

Spain’s tax system is based on worldwide income. This means you must report all your income to the Spanish Tax Agency (Agencia Tributaria), including:

• Salary from a US employer (even if remote).
• Rental income from US properties.
• Investment income (dividends, interest) from US accounts.
• US Social Security benefits (though often exempted or taxed only in the U.S. under the treaty).

US-Spain Tax Treaty: Prevents Double Taxation

The US-Spain Tax Treaty is designed to prevent you from paying taxes twice on the same income.

• Relief on Your U.S. Return: The primary mechanism for relief for U.S. citizens is the Foreign Tax Credit (FTC) on IRS Form 1116. This allows you to claim a credit for income taxes paid to Spain against your U.S. tax liability.
• The Saving Clause: Due to a “Saving Clause” in the treaty, the U.S. reserves the right to tax its citizens as if the treaty did not exist. This is why you must always file a U.S. tax return, even if you eliminate your U.S. tax liability using the Foreign Tax Credit (or the Foreign Earned Income Exclusion, for earned income).

Key Filings: FBAR and FATCA (Mandatory for Americans Abroad)

In addition to filing your U.S. tax return (Form 1040), US citizens in Spain must also comply with two key information reporting requirements to the U.S. government:

• FBAR (FinCEN Form 114): Required if the aggregate total value of all your foreign financial accounts (including Spanish bank/brokerage accounts) exceeded $10,000 at any point during the calendar year.
• FATCA (Form 8938): Required if your total specified foreign financial assets exceed high thresholds (e.g., $200,000 on the last day of the year for single filers residing abroad).

🔵Scenario 2 – You are NOT a Resident

If you do not meet any of the residency criteria (e.g., you stay less than 183 days a year), you are a non-resident for Spanish tax purposes.

You Only Pay Taxes in Spain on Spanish-Sourced Income

As a non-resident, you are only liable to pay tax in Spain on income that is earned within Spanish territory. Common examples include:

• Income from a Spanish rental property.
• Capital gains from the sale of Spanish real estate.
• Dividends or interest paid by a Spanish company.

Non-Resident Income Tax (IRNR)

This tax is called Impuesto sobre la Renta de No Residentes (IRNR). The tax rate is generally a flat rate (currently 24% for US citizens) applied to your gross Spanish-sourced income.

Notably, if you own Spanish real estate and do not rent it out, you are still required to pay IRNR annually on a deemed income calculated based on the property’s cadastral value.

🔵 Summary Table – Where Do You Pay Taxes?

🔵 Conclusion & Next Steps

“In summary: Yes, you will likely pay taxes in Spain if you live here, but the US-Spain Tax Treaty and mechanisms like the Foreign Tax Credit are designed to prevent you from paying tax on the same income twice. Your U.S. filing obligation, including FBAR and FATCA, continues regardless of where you live.”