Tax guide for US expats living in Spain
Living in Spain as a US citizen means navigating two overlapping systems – American tax obligations that never go away and Spain’s own residency-based rules. Understanding how taxes in Spain work is essential to avoid double taxation, claim the right exclusions or credits, and stay compliant on both sides of the Atlantic.
This guide clarifies what income is taxed, which forms apply, when to file, and how treaty benefits and smart planning can keep things on track.
A quick overview of the Spanish tax system
Taxation in Spain treats residents on worldwide income and nonresidents on Spanish-source income, with progressive bands set by the state and each autonomous community. In practice, your tax rate depends on where you live, while the national savings scale applies uniformly, and key filing deadlines fall in late spring.
The table below gives a quick snapshot of the Spanish tax system and key details to note
| Item | Details |
|---|---|
| Primary tax form for residents | Modelo 100 – Declaración de la Renta (IRPF). |
| Tax year | January 1 – December 31 (calendar year). |
| Tax due date | Generally, June 30 for the prior year’s return (Renta 2024 filed Apr 2 – Jun 30, 2025; bank-draft cutoff typically Jun 25). |
| Criteria for tax residency | Resident if >183 days in Spain, or center of economic interests in Spain; presumption if spouse/minor children habitually reside in Spain. |
| US tax filing requirements | Must file Form 1040 and report worldwide income; if living abroad, there’s an automatic 2-month extension to Jun 15 (regular due date Apr 15). |
| Eligibility for FEIE | Qualify under the physical presence or bona fide residence test; 2025 FEIE = $130,000. |
| Methods of double-tax relief | US–Spain tax treaty + Foreign Tax Credit (Form 1116). |
| Tax residency for dual citizens | Both countries may tax; the treaty’s tie-breaker applies, but the US saving clause lets the US tax its citizens. |
| Estate and inheritance tax | Spain levies Impuesto sobre Sucesiones y Donaciones (regional administration); the US estate tax may also apply. |
| Overview of local tax rates | Employment/business income uses progressive state + regional scales that vary by autonomous community; the national savings scale is 19% / 21% / 23% / 27% / 30% from 2025. |
Are you a tax resident in Spain?
In Spain, your income taxation depends on whether you are resident or non-resident for the calendar year. Residents are taxed on worldwide income, while non-residents are taxed only on Spanish-source income – your status also determines which rate applies under Spain’s tax system. The law sets objective tests to decide residency, summarized below.
-
183-day presence (bright-line test)
Spend more than 183 days in Spain during the calendar year and you meet the residency threshold. Those days include most temporary absences; more than 183 days is a percentage of the year that exceeds half. -
Center of economic interests
You are a resident if your principal place of work, business, or economic interests is based in Spain, even if you spent fewer than 183 days. This can make a foreigner a resident when Spain is where they manage, earn, or control most activity. -
Family tie presumption
If your legally non-separated spouse and dependent minor children habitually live in Spain, you are presumed resident unless you prove otherwise. This presumption affects which tax rate schedule you fall under and can apply even when travel patterns are mixed.
Spain’s tax system at a glance
Spain’s tax system blends national rules with powerful regional levers, so the effective tax range you face depends on where you live. Below is a quick tour of the Spanish tax landscape and the key threshold figures US expats should know for 2025.
Personal income tax (IRPF)
Residents are taxed on worldwide income, split between general income (salary, business, rental) and savings income (interest, dividends, capital gains). General rates are a state scale plus a regional scale, so totals vary by autonomous community each year. Nonresidents generally pay a flat 24% on Spanish-source income (19% if EU/EEA resident).
Spanish income tax rates
The nationwide savings scale is uniform – here’s the 2025 grid you’ll actually use for investment income:
| Savings taxable base (EUR) | Tax rate |
|---|---|
| Up to 6,000 | 19% |
| 6,000–50,000 | 21% |
| 50,000–200,000 | 23% |
| 200,000–300,000 | 27% |
| Over 300,000 | 30% |
NOTE! For residents, capital gains, interest, and dividends are taxed in the savings base, so these bands apply across those items. What is not the same are the general income rates on salary/business income – those vary by autonomous community (state + regional scales).
VAT (IVA)
Spain applies three IVA bands, and businesses charge IVA on sales and then deduct IVA on inputs, so the tax burdens the final consumer. Your invoices must show the applicable percentage and follow the invoicing rules in the VAT law. If you’re running a small business as an autónomo, choosing the right regime can materially change your effective tax rate.
-
Standard rate 21%
Applies to most goods and services nationwide. You charge 21% unless a reduced rate in article 91 applies; wrong classification risks assessments and penalties. -
Reduced rate by 10%
Covers specific items like many foods, hospitality, and some housing-related services. It’s a closed list. Always verify your exact activity before applying the 10% rate. -
Super-reduced rate 4%
Reserved for basic necessities such as common bread, books, and essential medicines. As of 1 January 2025, olive oil is included at 4%, a permanent change you should reflect in pricing and accounting.
Wealth tax
Wealth tax (Impuesto sobre el Patrimonio) is an annual levy on net assets measured each 31 December. Regions control rates and reliefs, but the national framework sets the baseline scale from 0.2% up to 3.5% and a minimum exemption of €700,000 per person if your region hasn’t set a different threshold.
Your primary residence is additionally exempt up to €300,000 per owner, and business assets and qualifying shareholdings may be exempt if strict conditions are met. Residents are taxed on worldwide assets; nonresidents on Spanish-situs assets only. A separate Solidarity Tax on Large Fortunes currently applies to net worth above €3,000,000, filing each July for the prior year, and coordinates with regional wealth-tax relief.
Inheritance and gift tax
Spain’s Inheritance and Gift Tax (ISD) taxes transfers mortis causa and inter vivos with a national tariff and strong regional adjustments. The national progressive tariff runs from 7.65% (lowest bracket) up to 34%, then multipliers apply based on kinship and pre-existing wealth.
- Scope – Residents can be taxed on worldwide acquisitions; nonresidents on Spanish-located assets or rights.
- Deadline – Inheritances generally must be filed within 6 months of death; you can request a one-time 6-month extension (interest applies).
- Regional power – Communities redefine reductions, bonuses, and even the tariff; your effective percentage depends strongly on where the tax is due.
- Insurance – Life insurance paid to a beneficiary is taxable in ISD if the policyholder is different; plan beneficiary designations with ISD in mind.
Property tax
IBI (Impuesto sobre Bienes Inmuebles) is a municipal annual tax based on the cadastral value of the property. The national law fixes the rate range for urban property between 0.4% and 1.10% (rural: 0.3%–0.90%), and each Ayuntamiento sets the exact percentage by ordinance.
Expect the bill once a year; payment windows and surcharges for late payment are local. Because cadastral values update periodically, your IBI can change even if the posted municipal tax rate is steady – factor that into ownership costs.
Exit tax
Spain’s IRPF exit tax recognizes unrealized gains when long-term residents move their tax residence abroad. It applies if you were resident in Spain for at least 10 of the last 15 tax years and, at exit, either (a) your shares/units in entities exceed €4,000,000 in value in total, or (b) you hold at least 25% of an entity worth over €1,000,000.
- Taxable event – The difference between market value and cost of the affected shares/units is a capital gain at exit.
- When to declare – You include the gain in the last IRPF period and file a complementary return during the filing window of the first year you’re no longer resident.
- Deferral – Moves to another EU/EEA state can access deferral subject to conditions (e.g., guarantees, ongoing notifications) and the tax becomes payable on later triggers like an actual sale.
- Temporary moves – Special rules allow aplazamiento (deferral) for temporary postings; breaching conditions accelerate the tax.
Pro tip by TFX tax expert: Model the exit early. The thresholds are bright-line, and the percentage you ultimately pay depends on the savings-base scale in effect the year you leave.
Capital gains tax
Capital gains realized by residents are taxed in the savings base at national rates, which is why these figures match the income table above. The 2025 schedule increased the top band to 30%, so timing matters if you’re near a threshold.
| Savings-based capital gain (EUR) | Tax rate (percentage) |
|---|---|
| Up to 6,000 | 19 |
| 6,000–50,000 | 21 |
| 50,000–200,000 | 23 |
| 200,000–300,000 | 27 |
| Over 300,000 | 30 |
Short-term vs long-term is unified in the savings base – holding period doesn’t change the band, only your place in the scale. For nonresidents, special IRNR rules apply (separate from the resident savings scale); sales of Spanish real estate involve withholding at source and a final settlement.
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Spain income: what’s taxed, what isn’t
Getting taxes in Spain right starts with knowing which receipts fall into the general base vs the savings base, and which are out of scope. Here’s a clear, 20252026 view that aligns with Spanish tax law and regional practice in places like Barcelona.
What counts as taxable income?
Most everyday receipts are taxable, though the income tax rate and percentage depend on the base (general vs savings) and, for the general base, your autonomous community. Think salary in Barcelona, self-employment, rents, and most investment returns – each has its own threshold and treatment.
- Employment income – Taxable in the general base with progressive state + regional scales; real rate depends on region (e.g., Catalonia for Barcelona residents). Withholding applies via payroll and reconciles at year-end.
- Self-employment and business income (autónomos) – Taxable in the general base; quarterly prepayments and deductible expenses apply.
- Savings income (interest, dividends, capital gains) – Taxable in the savings base at national bands: up to €300,000 at 30% from 1 January 2025. These percentages also apply to resident capital gains within the savings base.
- Rental income – For residents, in the general base (net of allowable expenses). Nonresidents face IRNR at 24% or 19% if EU/EEA resident, with different expense rules.
- Private pensions, annuities, and unemployment (ordinary) – Generally taxable; pensions are typically treated as employment income in the general base.
- Crypto and securities trading – Gains are taxed in the savings base at the same percentage bands as other investment income.
- Special regime (impatriates/Beckham) – Elective rules tax Spanish-source employment at flat schedules and apply the savings-based scale; check your threshold and filing under Modelo 151.
What income is exempt?
Spain excludes specific items to protect families, disability, scholarship and award policy, and genuine foreign-work situations. Below are high-value exemptions – each has conditions, amounts, or a threshold to respect.
- Severance for termination (indemnizaciones por despido o cese) – Exempt up to €180,000 and within Spanish labor-law limits; any excess over this threshold is taxable.
- Disability benefits – Permanent absolute disability or severe disability (gran invalidez) benefits paid by Social Security or substituting entities are exempt; payments from private employers/insurers don’t qualify.
- Child support received by children – Court-ordered (or formalized via notarial agreement) child maintenance to the child is exempt.
- Work performed abroad (art. 7.p LIRPF) – Employment income for duties physically performed outside Spain can be exempt up to €60,100 per year if the host country levies a similar income tax (or has a treaty with information exchange) and it’s not a tax haven; the exempt amount is prorated by days abroad.
- Maternity/paternity and similar family benefits – Public benefits for birth and care of a child, and certain family allowances are exempt.
- Awards of special public interest – Relevant literary, artistic, or scientific awards formally declared exempt by the tax administration and the Premios Princesa de Asturias are exempt under regulatory criteria.
- Unemployment in a lump sum (pago único) – The single-payment capitalization of unemployment benefit for starting a business is exempt when requirements are met.
Social security in Spain – expat basics
Spain’s social security covers healthcare, unemployment, pensions, and family leave, and it sits alongside Taxes in Spain rather than replacing them. In 2025, the standard employee contribution is 28.30% of salary – 23.60% employer and 4.70% worker – plus a 0.80% Mecanismo de Equidad Intergeneracional (MEI) percentage split 0.67%/0.13%.
These contributions entitle workers, including any foreigner legally employed in Spain, to a wide range of benefits that depend on their income history and contribution period. For example, unemployment pays 70% of the regulatory base for the first 180 days and 60% thereafter, while birth-and-care leave is 19 weeks per parent (32 for single-parent families) from 31 July 2025.
Healthcare access is managed regionally – SERMAS in Madrid and CatSalut in Barcelona – and most contributors are issued a Número de Seguridad Social and Tarjeta Sanitaria Individual (TSI) for care; those on a US payroll or self-employed should check the Spain–US totalization rules to avoid double social contributions.
Top tax deductions – US expats in Spain
Spain’s rules-based system keeps Spanish tax write-offs tight, but the right ones can still move your bill – especially if you plan ahead and document well. Figures below reflect 2025 filing (income year 2024) and help you prep for 2026 taxes.
- Employees – Deduct Social Security contributions, compulsory union/professional fees (up to 500 €), and legal-defense costs tied to your job (up to 300 €). A standard 2,000 € employment-expense allowance applies, with extra amounts for relocation and certain disability categories.
- Self-employed (autónomos) – Claim necessary and clearly business-related costs (workspace, utilities, supplies, insurance, pro-rata home office, and depreciation per official rules). Keep invoices and books aligned to your chosen method – these reduce the base taxed at your applicable income rate.
- Rentals (residents) – From gross rent, deduct interest and financing costs, repairs and maintenance, local taxes/fees, community charges, insurance, services and supplies, and building amortization at 3% of the higher of purchase price or cadastral value (excluding land). Deductions cannot exceed rental receipts; any excess carries forward for 4 years.
- Investment income – For dividends/interest, only administration and deposit fees for negotiable securities are deductible; advisory or discretionary-management fees are not. Withholdings (“retenciones”) are credited against the final Spanish tax due.
- Loss set-offs (savings base) – Capital losses offset gains; cross-offsets with capital-income are capped at 25% (that percentage applies both ways), with unused negatives carried forward 4 years.
- Nonresidents (foreigner perspective) – If you’re a nonresident landlord under IRNR, the base is generally gross with no expense deduction; only EU/EEA residents may deduct qualifying costs. Typical IRNR income tax rate on many items is 24% (or 19% for EU/EEA residents).
- Regional sweeteners (Madrid example) – Regions add their own deductions; in Madrid, eligible tenants may deduct 30% of annual rent with a cap of 1,237.20 € under the autonomous-quota rules (subject to age and income limits). Check your community’s bulletin for exact thresholds before filing.
NOTE! Deductions shrink the taxable rates on the savings base in 2025, so timing and evidence matter when you aim for the best percentage outcome.
Spain pension basics – what to know
Spain’s state pension is a contributory, pay-as-you-go system run by Seguridad Social. In 2025, the ordinary retirement age is 66 years and 8 months, or 65 with at least 38 years and 3 months of contributions.
- Eligibility & vesting – You need 15 years (5,475 days) of contributions, including 2 years within the last 15, before claiming. A foreigner who contributes to Spanish Social Security qualifies on the same terms.
- How your pension is calculated – The base rate uses the last 300 contribution months ÷ 350. The percentage applied starts at 50% with 15 years and rises by 0.19% per month for the next 248 months, then 0.18% per month until it reaches 100%.
- Tax at retirement – Pension income is subject to Spanish tax as general income. Your income tax rate is progressive and set by the state, plus your autonomous community.
Smart tax credits for US expats in Spain
Spain’s IRPF offers targeted relief that can trim your final Spanish tax without gimmicks, even when you also pay taxes in Spain on worldwide income. Here are the credits and deductions most US filers actually use in 2025, with the key threshold, dates, and tax rate mechanics that matter.
International double-tax relief (IRPF Art. 80)
If you’re a Spanish tax resident and a slice of your income was taxed abroad, Spain lets you deduct the lower of the foreign tax paid or the Spanish taxation rate due on that same income. It’s the workhorse credit for expats and applies to the 2025 return (filed April–June 2026) when documentation proves the foreign tax.
Start-up investment deduction (50% up to €100,000)
Invest in a qualifying new or recently created company and deduct 50% of the investment from your state IRPF, up to a €100,000 annual threshold. The incentive applies when AEAT conditions are met (e.g., eligible shares and proper certification, such as Modelo 165 from the company).
Donations under Law 49/2002
Give to qualified charities and deduct 80% of the first €250, then 40% of the rest, 45% if you’ve donated to the same entity for 3 consecutive years since 2024. For IRPF, the overall donations deduction cannot exceed 10% of your taxable base.
Home purchase deduction – transitional only
State-level relief for buying your habitual residence was abolished from 1 January 2013; only buyers who already claimed it before then can continue. Under that transitional regime, the typical split is 7.5% state + 7.5% regional (up to the historic base cap), effectively 15% subject to the old conditions.
Regional add-ons (check your comunidad)
Autonomous communities set extra credits – rent, family, education, and investment items – each with its own threshold and documentation rules. Always review the AEAT guide to regional deductions for the year you file to make sure you’re not leaving money on the table.
US–Spain tax treaty: what it means now
Signed in Madrid on 22 February 1990 and effective 1 January 1991, the treaty sets clear rules to prevent the same income being taxed twice. A Protocol signed 14 January 2013 – effective 27 November 2019 – modernized the deal with lower or zero withholding on many dividends, interest, and royalties, and added mandatory binding arbitration.
It decides residency with tie-breakers, applies the 183-day employment test, and coordinates how pensions, capital gains, and business profits are taxed. If double tax still occurs, the Mutual Agreement Procedure lets the IRS and Spain’s Agencia Tributaria resolve cases through their competent authorities.
Top tax forms US expats use in Spain
Here are the core forms US expats in Spain rely on. Each one keeps you compliant and can lower your overall tax.
- Form 1040: The standard US individual income tax return. Americans abroad receive an automatic 2-month filing extension to June 15 each year.
- Form 2555: Use the Foreign Earned Income Exclusion if you meet bona fide residence or the 330-day physical presence test. The exclusion is $130,000 for tax year 2025 and adjusts annually.
- Form 1116: Claim the Foreign Tax Credit for Spanish tax paid on the same income. Unused credits carry back 1 year and carry forward 10 years.
- FBAR FinCEN Form 114: Report foreign accounts if the total across all accounts exceeds $10,000 at any time. The report is due April 15 with an automatic extension to October 15.
- Form 8938: Report specified foreign financial assets when thresholds apply for those living abroad. Single thresholds are $200,000 end of year or $300,000 during the year, and married filing jointly thresholds are $400,000 end of year or $600,000 during the year.
Key Spanish tax forms and deadlines
Knowing the right forms and due dates helps avoid costly mistakes. Here’s what American expats in Spain need to track for 2025.
- Modelo 100 is the resident income tax return, filed from April 2 to June 30, 2025.
- Modelo 130 or 131 covers quarterly self-employed income and is due by the 20th of April, July, October, and January.
- Modelo 714 reports wealth tax for residents with high net worth and is filed with the income return.
- Modelo 718 is the Solidarity Tax return for fortunes over €3 million and was due July 1–31, 2025.
- Modelo 720 reports foreign assets over €50,000 and had to be filed by March 31, 2025.
- Modelo 210 is for nonresident income like rent and gains, usually due quarterly or by December 31 for imputed income.
Strategies for living – and saving – in Spain
Even after you’ve sorted your income taxes, there are a few important layers to be aware of. From how Spain treats trusts to cross-border money movements and expat tax breaks, knowing the fine print can save you stress – and money.
Trusts: rare in Spain, taxable nonetheless
Spain doesn’t recognize trusts under domestic law, but it may still tax trust income if you're a resident beneficiary. Even discretionary trusts can trigger tax if income is deemed attributed. Spain's focus is on transparency and reporting – especially with global efforts like FATCA and Modelo 720 in play. For US expats with complex structures, tax planning is crucial.
Exchange controls: report, don’t restrict
Spain allows free capital movement, but you must report major transfers. If you're moving €10,000 or more across borders (cash or equivalent), it must be declared. Foreign investments by nonresidents – whether real estate or business stakes – must be registered with the Directorate of Commerce. Spanish residents must also report foreign holdings above €50,000 via Modelo 720 by March 31 each year.
Beckham regime: a valuable expat tool
Spain’s impatriate tax regime – informally called the Beckham law – lets eligible newcomers pay tax only on Spanish-source income for six years. In 2025, the flat rate is 24% up to €600,000 (47% above that). This can be highly advantageous for remote workers, senior execs, and founders relocating from the US. Just be aware: the election must be made within six months of registration, and opting out isn’t easy.
Reporting foreign assets in two countries
Americans in Spain must report foreign financial accounts and assets in Spain and in the US – there are parallel rules on both sides.
In Spain, residents file Modelo 720 to disclose foreign bank accounts, securities, and real estate when any category exceeds €50,000, and they refile if that category increases by more than €20,000 or ownership changes; the window for prior-year data typically runs to March 31.
In the US, FATCA Form 8938 applies when you live abroad and hold specified foreign financial assets above $200,000 at year-end ($300,000 max during the year) if single, or $400,000/$600,000 if married filing jointly.
Separately, the FBAR (FinCEN Form 114) is required when foreign accounts total over $10,000 at any time, with an April 15 due date and an automatic extension to October 15.
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