Am I eligible to file IRS form 6166 if I live in Madrid and have a NIE (no work permit)

QuestionsCategory: Work PermitsAm I eligible to file IRS form 6166 if I live in Madrid and have a NIE (no work permit)
Anonymous asked 2 years ago

Hi,
 
I just found out from one of your posted answers on this site about the IRS form 6166.  I have a NIE without a work permit since June of last year when I moved to Madrid from NYC.  I didn’t have to file a 1040 for last year since I had no income.  My plans are to first work as a freelancer here in Madrid if I can register as a U.S. Resident for fiscal purposes with the 6166 form and later set up an LLC or domestic corp in the states, with the 6166 form also while I continue to live in Spain.  Is it legally possible to work under a U.S. Passport and U.S. Fiscal residency which looks like what this form 6166 is for while I am residing in Spain?  How does it work out with Social Security from the U.S.?  Would the 6166 form allow me to work from Spain without a work permit, without having to pay Seguridad Social in Spain and without paying IVA and IRPF under a “contrato mercantil” with a client, as a freelancer and as a U.S. LLC or domestic corporation.  
Your answer is greatly appreciated.  I’m seriously considering my options at this point.
Best regards,
Carol

Christina Samson Staff replied 2 years ago

Hi, you should always file a 1040 whether or not you have income. As an expat you have a 2 month extension to file your 1040, so I suggest you do it, to be safe.In any case, I believe you should be eligible for the 6166.The answer to all your questions is yes, due to the Spain-US tax treaty you will not be doubly taxed, so you can declare income and pay taxes in the US, and have contrato mercantil with a client with 0 IVA and IRPF, but remember to put your US contact information on all contracts. Note that this is does affect your legality in Spain and you should continue to maintain your student NIE if you want to keep your legal status in Spain. In the US, use your Spanish address on tax forms.NOTE these are just some tips but this is not a substitute for professional financial or tax information.You may also consider establishing a business presence in Spain, depending on your objectives.<br>

Carol replied 2 years ago

Thanks a lot for your answer. I’m a U.S. Citizen with a non-lucrative residence permit NIE here in Spain since June of last year, not a student NIE. Given this non lucrative type of residency, if I set up an LLC or domestic company in the states while living in Spain and get this 6166 form for me and the company, can I work here in Spain and have Spanish clients under contratos mercantiles if I put my US contact information on all contracts or can I only work with clients back in the states? Does what you explained about 0 IVA, IRPF apply in this case also? Would I be exempt from having to pay Spanish Social Security if I do this? Also, would I need to file a Spanish tax return if I only deal with clients that live back in the states and what about if I also deal with Spanish clients? I appreciate your help! On a separate note, does the visa de emprendedores require that you hire employees or can you do it alone? Thanks,Caroline

Shaheen S.Shaheen S. Staff replied 2 years ago

Hi Caroline, yes you can do that. Even though you are physically in Spain you would be claiming that your business is operating from the US. If you are planning to live in Spain long term you would probably want to consider eventually moving your business operations to Spain, and paying taxes in that country.

1 Answers
Shaheen S.Shaheen S. Staff answered 2 years ago

Here you can find a link to a related question that Christina previously answered! http://spainguru.es/question/i-dont-have-a-work-permit-in-spain-how-do-i-provide-invoices-as-an-american/