US Expat Tax Guide: Americans Living in Spain (2025 Tax Year) 

Living in Spain as an American expat means navigating two tax systems, but here’s the encouraging news: Spain’s top tax rate of 47% versus the US rate of 37% means Spanish taxes often generate enough foreign tax credits to eliminate US tax liability entirely. Whether you’re drawn to Madrid’s energy, Barcelona’s innovation, or Spain’s incredible quality of life, understanding your tax obligations doesn’t have to be overwhelming. 

As a US citizen living in Spain, you’ll file taxes in both countries, but the Foreign Earned Income Exclusion and Foreign Tax Credit typically eliminate any US tax liability. For 2025 (filed in 2026), you can exclude up to $130,000 of foreign earned income from US taxation, and Spain’s relatively high tax rates often provide enough foreign tax credits to cover any remaining US obligations. 

The key is getting your filing strategy right from the start. That’s where proper guidance makes all the difference in achieving complete peace of mind. 

Tax Obligations as a US Expat in Spain 

Spanish Tax Residency Rules 

Spain determines your tax residency based on clear, objective criteria. You become a Spanish tax resident if you meet any of these conditions: 

• Spend more than 183 days in Spain during a calendar year 
• Have your main economic interests in Spain (business activities, investments, or employment) 
• Your spouse and minor children are Spanish tax residents (unless you can prove tax residency elsewhere) 

Spanish tax residents pay taxes on worldwide income at progressive rates ranging from 19% to 47%, depending on income level and autonomous community.

Non-residents pay a flat 24% tax rate (or 19% for EU/EEA citizens) only on Spanish-source income. 

US Tax Obligations Continue Abroad 

As a US citizen, you must file US tax returns regardless of where you live. This means: 

• Annual US tax return filing by April 15 (automatic extension to June 15 for expats) 
• Reporting worldwide income to the IRS 
• FBAR filing requirements if foreign accounts exceed $10,000 at any point during the year 
• Potential Form 8938 (FATCA) filing for higher account balances 

Don’t worry—these requirements sound more intimidating than they actually are in practice. 

Two Main Protections That Eliminate Most US Tax Liability 

Foreign Earned Income Exclusion (FEIE) 

The FEIE allows you to exclude up to $130,000 of foreign earned income (2025 tax year) from US taxation. This exclusion works perfectly for most expats in Spain since Spanish income tax rates are generally higher than US rates. 

Example calculation: 

• Annual salary in Spain: €80,000 (approximately $87,000) 
• FEIE exclusion: $87,000 (full amount excluded) 
• US tax owed: $0 

To qualify, you must meet either: 

• Physical Presence Test: Present in foreign countries for 330+ days in a 12-month period 
• Bona Fide Residence Test: Genuine resident of Spain with intent to remain indefinitely 

Foreign Tax Credit (FTC) 

The Foreign Tax Credit provides a dollar-for-dollar credit against US taxes for income taxes paid to Spain. Given Spain’s tax rates (up to 47%), this credit often eliminates US tax liability entirely. 

Example for higher earners: 

• Annual income: €150,000 ($164,000) 
• Spanish taxes paid: €45,000 ($49,000) 
• US taxes before credit: $35,000 
• Foreign Tax Credit applied: $35,000 
• US tax owed: $0 

Spanish Tax System Overview for American Expats 

Progressive Tax Rates for Residents 

Spain’s progressive tax structure for 2025: 

Income Range (EUR)	Tax Rate
€0 – €12,450	19%
€12,450 – €20,200	24%
€20,200 – €35,200	30%
€35,200 – €60,000	37%
€60,000 – €300,000	45%
Over €300,000	47%

Special Regime for New Spanish Residents 

Spain offers an attractive “Beckham Law“ regime for certain new residents. Under this special tax regime, qualifying individuals can elect to be taxed as non-residents for up to six years, paying a flat 24% rate only on Spanish-source income (up to €600,000). 

Qualification requirements: 

• Haven’t been Spanish tax residents in the previous 10 years 
• Become Spanish tax residents due to employment or business activities 
• Employment income represents more than 75% of total Spanish income 

This regime can provide significant tax savings for high-earning American executives or entrepreneurs moving to Spain. Learn more about international tax planning strategies for expats. 

Common Scenarios and Solutions 

Scenario 1: Corporate Expat in Madrid 

Situation: American working for a multinational company, €75,000 salary, housing allowance, tax equalization from the employer 

Tax Strategy: 

• Use FEIE to exclude the entire earned income 
• No US tax liability on salary 
• Spanish taxes are handled through employer withholding 
• Focus on correctly reporting employer benefits 

Scenario 2: Digital Nomad/Entrepreneur 

Situation: Location-independent consultant, $120,000 income, traveling between Spain and other EU countries 

Tax Strategy: 

• Carefully track days to establish Spanish tax residency 
• Use FEIE for income up to $130,000 
• Consider Spanish autonomo (self-employed) registration 
• Plan travel to optimize the physical presence test 

Scenario 3: Retiree in Valencia 

Situation: Retired American, US Social Security, pension income, Spanish rental property 

Tax Strategy: 

• Spain generally doesn’t tax US Social Security under the tax treaty 
• Use the FTC for pension income taxed in both countries 
• Spanish rental income taxed in Spain, credited against US 
• Potential streaming of tax treaty benefits 

Filing Requirements and Deadlines 

Spanish Tax Filing 

• Tax year: January 1 – December 31 
• Filing period: April 1 – June 30 (for previous tax year) 
• Payment options: Full payment in June or split payments (60% June, 40% November) 
• Threshold for filing: Generally, €22,000+ for employed individuals 

US Tax Filing 

• Primary deadline: June 15 (automatic 2-month extension for expats) 
• Final extension: October 15 (with Form 4868) 
• FBAR deadline: April 15 (extended to October 15) 
• Payment due: Still April 15 (even with filing extension) 

Avoiding Common Mistakes 

Mistake 1: Not Planning for Spanish Tax Residency 

Many Americans accidentally become Spanish tax residents without realizing the implications. Track your days carefully and understand the 183-day rule. 

Mistake 2: Missing FBAR Requirements 

Spanish bank accounts, investment accounts, and even some pension schemes may trigger US reporting requirements. The Report of Foreign Bank and Financial Accounts (FBAR) penalties for non-compliance are severe. 

Mistake 3: Improper FEIE Election Timing 

Making the FEIE election too early or too late can cost thousands. The election affects your ability to claim certain other credits and deductions. 

Mistake 4: Ignoring Autonomous Community Variations 

Spanish tax rates vary significantly by region. Factor this into your decision about where to establish Spanish residence. 

Tax Treaty Benefits and Social Security 

US-Spain Tax Treaty 

The comprehensive tax treaty between the US and Spain provides several key benefits: 

• Eliminates double taxation on most types of income 
• Provides clarity on which country has taxing rights 
• Offers reduced withholding rates on dividends, interest, and royalties 
• Includes tie-breaker rules for dual residency situations 

Totalization Agreement 

The US-Spain totalization agreement ensures you don’t pay social security taxes to both countries simultaneously: 

• For employees: Generally, pay only to the country where you work 
• For self-employed: Choose which system to pay into 
• Benefits coordination: Credits earned in both countries count toward benefit eligibility 

Getting Professional Help 

Complex international tax situations benefit tremendously from professional guidance. Consider consulting a tax professional if you: 

• Earn above the FEIE threshold 
• Have multiple income sources across countries 
• Own Spanish or US businesses 
• Have significant investment accounts 
• Are behind on US tax filings 
• Face Spanish tax residency questions 

Next Steps for American Expats in Spain 

If you’re planning your move to Spain: 

• Research Spanish tax residency implications for your specific situation 
• Understand how your US income sources will be taxed 
• Consider the timing of major financial transactions around your move 
• Set up proper record-keeping systems from day one 

If you’re already living in Spain: 

• Determine your Spanish tax residency status 
• Evaluate whether FEIE or FTC provides better tax benefits 
• Ensure compliance with all US reporting requirements 
• Review your filing strategy annually as circumstances change 

If you’re behind on filings:  

• Don’t panic—streamlined procedures can help you catch up with minimal penalties  
• Gather necessary documentation systematically  
• Consider voluntary disclosure programs for optimal outcomes 

Living as an American expat in Spain offers incredible opportunities for personal and professional growth. With proper tax planning and compliance, you can focus on enjoying Spain’s incredible culture, cuisine, and lifestyle without worrying about your tax obligations. 

The key is staying informed, planning ahead, and getting professional help when needed. Spain’s tax system, combined with US expat provisions, typically results in fair overall tax treatment that won’t derail your Spanish adventure. 

Living Abroad in Spain? Greenback Can Help! 

Navigating the Spanish tax system as a US expat in Spain can get complicated fast. If you’d like some assurance that you’re getting the most out of your tax strategy, we can help! 

Greenback Expat Tax Services is an American company founded by and for US expats. Since 2009, we’ve helped more than 18,000 expats optimize their taxes in over 193 countries — including Spain! 

Contact us, and one of our customer champions will gladly help. If you need very specific advice on your specific tax situation, you can also click below to get a consultation with one of our expat tax experts.

This article is for informational purposes only and should not be considered tax advice. Tax situations vary greatly, and you should consult with a qualified tax professional for advice specific to your circumstances.