Question
My retired parents in the US would like to move to Spain to be close to us and are currently looking into the financial repercussions a big move would entail, specifically due to the fact that Spanish taxes are much higher. Could anybody recommend a good tax adviser/tax lawyer that is knowledgeable about Spanish taxes (regarding taxation of foreign pensions, income, etc.) and if they have any experience with the US system, even better!
Answers
These are the answers of some Facebook group members:
“Yes, Spanish taxes and gas are higher here, but so many other things are lower. Also, the lifestyle is healthier here, which has no price tag.”
“They can move to Spain for less than 6 months and keep tax residency in US or get the bulk of their assets out of their names and into a trust.”
“If they are not strapped in debt, taxes are a non-issue. It weighs out heavily in favor of Spain when you list the pros and cons. Tell them to get a dummy tax return completed, but to keep everything in perspective. The higher quality of food alone balances it out.”
“Also be aware that Medicare doesn’t extend outside US. They will be required to obtain private health in here, but the cost is a fraction of US and services quite good.”
“So many people have this question or similar questions. How much will I have to pay? The easy answer is you will have to pay more taxes in Spain than what you pay to the US.
But the nuanced answer is that it is different for everybody. Spain has similar benefits like the US, standard deductions, credits for children, better rates for investment income.
It has bad things, like taxing SS more than the US, etc.
What I suggest you do is that you hire a Spanish tax professional, feed him the numbers from 2022 and if there will be big changes for 2023 and later, then give him or her those numbers. He would run a simulation as if you were in Spain. Then a US tax professional would feed those numbers into the US tax return to see how much you would pay in the US.
Usually after the Foreign Tax Credit, you should pay zero or low amount in the US.
Spain has higher taxes but or cheaper food or better weather, etc. Life is not about taxes.”
“I am currently planning as well. I consulted with Beatriz at albea and I found her to be very knowledgeable, professional, and helpful.
In conclusion, moving to Spain from the US can have financial implications that should be considered. While taxes may be higher in Spain, the cost of living may be lower, and the lifestyle may be healthier. It is important to seek advice from tax professionals who are knowledgeable about Spanish and US taxes, as the nuances of individual situations can greatly impact tax liabilities. Hiring a Spanish tax professional to run a simulation based on individual financial data, followed by a US tax professional to determine the impact on US tax returns, can help provide a clearer picture of potential tax liabilities. Ultimately, while taxes are an important consideration, it should not be the only factor when deciding whether to make the move to Spain.
Bonus! 🙂
Check our article: I plan to retire in Spain. Are pension, social security and cash taxable?
Check our article What is the taxation on foreign retirement income from American 401-K or Roth IRA in Spain?
