Question
Anyone else afraid of Spain tax? That once they get Spanish Residency, Spain will try to come after all their sources of income from their home country. As an American citizen I’m already taxed no matter where I am, for Spain to also want a piece of it would be very bad. I believe I would only be taxed on income sourced in the country as a resident?
Answers
These are the answers of some Facebook group members:
”Only income source from my understanding. I have this mentality with all governments… not just Spain. US is the worst that I’ve encountered. They want you to even declare your international account numbers & address”
”Spain taxes on world-wide income and assets however, the tax treaty with the U.S. prevents “double taxation”. You get a credit off your US taxes for those you pay in Spain. BUT, as I understand it, Spain does not offer protection for Roth IRA’s. I will be consulting a tax attorney to verify that if I sell long held securities within the Roth before becoming a tax resident, I will avoid paying capital gains on those transactions in Spain”
”They do come after your worldwide income, there’s no way around it”
”And because by law you are required to file modelo 720 and disclose all foreign assets valued at more than €50k. Not doing so is tax fraud in the eyes of a judge”
“I’m not “afraid”. I’ve educated myself, sought advice, and made a decision. Yes, it’s a higher income tax bill, but with barely any property tax and health insurance less than 10% of my US spend, I come out well ahead”
”So you are saying if you owned property it would be much worse? I thought about buying property.. but not sure what kind of taxes I have to worry about.. I know in Spain there is some kind of double taxation on property I believe.. not sure if that is correct. But a property tax, then a tax that says you much financially benefit from owning the property so they want even more”
”I would think that one advantage of residency on non-lucrative visa is that as long as I am not working.. I am not taxed. But to have to pay tax on my dividend income and capital gains with my index fund after I pay the IRS, is nuts… but like someone said.. no double-taxation.. I just don’t want the non-lucrative visa make me be a tax slave to another country. The U.S. is enough”
”You do need a tax attorney, but the cold hard truth is that Spain does tax worldwide income. Spain knows your worldwide income because you are obligated by law to declare all of your income and assets that are superior to €50K, regardless of your residency status. Once you are a tax resident of Spain, if you have assets that are valued at 50k or more you are bound by law to file modelo 720 and declare said assets to Spanish tax authorities. Some people choose not to do it, but those people are committing tax fraud according to the law. The truth is the whole no double taxation isn’t really true. I file and pay taxes in two countries. I have consulted multiple tax attorneys on both side of the atlantic and there isn’t really a way around it. I’m not American, but from what I have heard is that since Spain taxes at a higher rate, you can deduct that from your US taxes and pay next to nothing on your US tax return. If you are going to live in Spain and use Spain’s services you must pay Spanish taxes, regardless of where your money comes from”
”Until recently, the minimum fine for incorrect, late or missing 720 forms was €10,000!!!! My husband and I had a lazy (ex-)accountant who filed incorrectly and we each had that fine slapped on us. Fortunately, the EU have ruled it’s too much. We don’t know how much we will eventually have to pay”
”No wealth tax in Andalucía. It depends on the Comunidad Autónoma that you reside”
”I know that Andalucia recently did away with the wealth tax (worldwide assets). Madrid also didn’t have that tax”
”Well if you come in on the new nomad visa you get a much lower rate for 5 years. So low in fact it’s probably a wash and about the same you’d Pay in the states. With a much lower cost of living and very low property tax. You’ll come out way ahead for the first 5 years”
”Yes, you have to declare your worldwide income in both spain and the US”
”If you live in Spain more than 183 days per year you are considered a tax resident of Spain. There is a tax treaty between the US and Spain which provides for no double taxation as I understand. As a tax resident of Spain you will pay tax on your worldwide income. That tax will be deducted from you US tax return”
”Put it this way if you don’t make a declaration, you don’t get any relief from double taxation treaty, as it only applies if you are declaring in both”
”The Digital Nomad Visa is a fast-track application. If you meet the requirements it is supposed take about a month, and you can apply from within Spain on a tourist visa. For the NLV you can only apply from your home country”
”The idea of the government of Spain making some big change overnight honestly made me laugh, because nothing, and I mean nothing, governmental happens fast in Spain.
(I live in France now, and when Macron literally signed the new retirement-age legislation overnight, I just about fell over.)
I would like to gently suggest that you consider taking nice long vacations in Spain instead of moving there. You can stay for up to 90 days out of 180 under a Schengen visa waiver and have a wonderful time, without worrying about double-taxation … or Socialism. (Or if you want to stay longer, just buy a place for cash that costs more than 500K€. That would qualify you for the golden visa, which requires only a minimum of one day of residency per year, neatly avoiding the double-taxation problem altogether”
”Nobody is going to tell you what to do or what makes the most sense for your situation . Good legal counsel explains how taxes work in Spain, you need to take the decision . Living in Spain has many advantages, but it’s not for free. You pay for the lifestyle , but to be honest you will pay for it anywhere else as well. Most of Western Europe has similar tax policies. If you want the lifestyle and the advantages you will be expected to pay your share. In my opinion just the fact of not potentially going bankrupt if you need medical care , as well as the much cheaper cost of health insurance more than balances out whatever you would pay in taxes, as well as the cheaper cost of living. But ultimately it’s a personal choice. If you think you would be paying too much and it’s not worth it for you, that’s fine. It doesn’t work for everyone. I would suggest finding legal counsel in Valencia if you plan on living there because these things vary between comunidad autónoma. I originally consulted Jet Abogados in Madrid, the information they gave me was accurate, but if you search the group there are dozens of posts on English speaking attorneys who do consults all over Spain. Last of all if you are looking to spend time in Spain without having to deal with visas and taxes…I would also suggest taking advantage of the 90 days you have as a tourist. You don’t have to live in Spain in order to enjoy what it has to offer. Immigration is hard, whichever way you want to slice it”
So according to Spainguru Facebook group members, as an American citizen, once you become a tax resident of Spain, you may be subject to taxation on your worldwide income. Spain has a tax treaty with the United States to prevent double taxation, allowing you to claim a credit for taxes paid in Spain on your U.S. tax return. However, it’s important to note that Spain requires the declaration of all income and assets valued at more than 50,000 euros, regardless of your residency status (Unless you are eligible for the Beckham Law special tax regime). Failure to comply with these requirements can be considered tax fraud. Each Spanish region may have different tax policies, so it’s advisable to consult a tax attorney or seek legal counsel to understand the specific implications in your desired location. Ultimately, the decision to move to Spain or any other country should consider the overall lifestyle benefits, cost of living, and taxation policies that align with your personal circumstances.
