What Americans Living in Spain Need to Know About Expat Taxes 

Spain’s vibrant culture and easygoing lifestyle have made it a popular destination for American expats. But when living in a foreign country, it’s important to understand what tax implications you may face. 

Going to Spain 

Spain Income Tax Rates 

In Spain, non-residents are taxed on their Spain-source income at a flat rate of 24%, or 19% if they are citizens or residents of an EU or EEA country. Residents of Spain are taxed at progressive rates, as shown below. 

Earnings in Euro (EUR)	Rate Applicable to Income Level (%)
€0.00 to €12,450.00	19%
€12,450.01 to €20,200.00	24%
€20,200.01 to €35,200.00	30%
€35,200.01 to €60,000.00	37%
€60,000.01 to €300,000	45%
over €300,000.01	47%

Note that under Spanish law, different regions (known as autonomous communities) can raise or lower these tax rates for their residents. Thus, your total tax liability may change depending on where you settle down. 

Who Is Liable to Pay Taxes in Spain? 

In Spain, you must file a tax return if any of the following are true: 

• You are employed and earn more than EUR 22,000 per year. 
• You receive income from multiple sources. 
• You are self-employed. 
• You receive more than EUR 1,600 in yearly dividends, interest, or capital gains in a single year. 
• You receive more than EUR 1,000 of rental income in a single year. 

Spanish Tax Residency 

You will be considered a tax resident of Spain if you meet any of the following qualifications: 

• You spend more than 183 days in Spain during a calendar year. 
• You have a business or other economic interest located in Spain. 
• Your spouse or underage children are tax residents of Spain (unless you can prove that you are a tax resident of another country). 

If you don’t meet these qualifications, you will be considered a non-resident for tax purposes. 

Income Subject to Taxation in Spain 

If you are considered a Spanish tax resident, you will be taxed on your worldwide income. (You can exclude up to EUR 60,100 of income from work performed outside of Spain if you meet certain conditions.) 

If you are considered a non-resident, you will only be taxed on income you received from a Spanish source. 

Taxes on Capital Gains and Losses 

Profits from selling investments such as stocks or real estate are called capital gains. Spain imposes a tax on capital gains. Capital gains for non-residents are taxed at a flat rate of 19%. Residents’ capital gains are taxed at progressive rates, listed below. (All amounts are given in EUR.) 

Capital Gains	Tax Rate
€1 to €6,000	19%
€6,000 to €50,000	21%
€50,000+	23%

Estate and Gift Tax 

Spain taxes inheritances and gifts for both residents and non-residents. Residents are taxed on worldwide assets, while non-residents are taxed only on assets located within Spain. The tax rates are progressive, ranging from 7.65% to 34%, depending on the value of the inheritance or gift, with closer family members receiving higher allowances. (This is true for residents and non-residents alike.) 

As with the income tax, Spain’s autonomous communities can adjust these rates and allowances, so the rate you pay will vary depending on the location of the assets. 

Social Security in Spain 

Like the US, Spain maintains a social security system funded by contributions from the earnings of employers and employees. The standard rates are 6.35% from employees and 29.9% from employers. 

Filing Taxes in Spain 

Tax Year and Deadlines 

Just like in the US, the Spanish tax year aligns with the calendar year: January 1 to December 31. Tax returns for the previous year must be filed between April and June of the following year. The exact deadline can vary slightly each year, but it generally falls in late June. 

Filing Requirements 

• Residents: As a resident of Spain, you are required to file a tax return if your worldwide income exceeds certain thresholds. For example, if your employment income exceeds €22,000, or if you have rental income, capital gains, or other sources of income over certain limits, you must file a return. Additionally, if you have significant savings, investments, or own property abroad worth more than €50,000, you must report these assets annually. 
• Non-Residents: If you are a non-resident, you only need to file a tax return for income earned within Spain. This includes rental income from property in Spain, income from Spanish employment, or any capital gains from the sale of Spanish assets. 

Payment Options 

Taxes in Spain can be paid in several ways. The most common method is via direct debit from a Spanish bank account, which is set up when you file your tax return. Payments can typically be made in two installments: 60% in June when you file, and the remaining 40% in November. If you prefer, you can also pay the full amount in June. In some cases, taxpayers can request a payment plan to spread the payments over a longer period, but this usually incurs interest​. 

Late Filing and Penalties 

Spain imposes penalties for late filing or underpayment of taxes. The penalties can range from 5% to 20% of the unpaid tax, depending on how late the payment is made. Additionally, interest accrues on unpaid taxes. If you realize you have made a mistake on your tax return, it is possible to file an amended return to correct the error, but it’s advisable to do so as soon as possible to minimize penalties. 

Tax Treaties and Avoiding Double Taxation 

As an American living in Spain, you have several options available to help you avoid double taxation. 

Tax Treaty 

The US has a tax treaty with Spain. This US-Spain tax treaty helps prevent double taxation by providing clear rules for which country has the right to tax a given individual’s income.  

Totalization Agreement 

The US-Spain totalization agreement regulates which country’s social security system an expat may be obligated to contribute to. The agreement ensures that individuals who work in both countries are only required to pay into one country’s social security system. 

US Tax Deductions and Credits 

The IRS provides multiple tax credits and deductions for Americans living abroad, such as: 

• Foreign Earned Income Exclusion (FEIE) 
• Foreign Tax Credit 
• Foreign Housing Deduction (or Exclusion) 

Using these benefits, many US expats can reduce their US tax bill, potentially to zero. 

Tax Deductions in Spain 

Spain provides quite a few deductions for tax residents on certain expenses, such as: 

• Investments in a principal residence 
• Foreign taxes 
• Business activities 
• Business savings accounts 
• Maternity leave 
• Pensions 

It’s always wise to consult a tax professional to ensure that your Spanish tax bill is optimized for maximum savings. 

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.