Question about working in Spain for a US company
Is it better to be paid in euros when working in Spain for a US company, and is taxation based on where you live? If I switch to autonomo, how will it affect my current visa, and how can I maximize income while staying tax-compliant when working abroad?
Answers
These are the answers of some Facebook group members:
”1. Euros or dollars is a purely personal choice. For 99% of people living in Spain, euros will be preferable — it’s what we use here! But it really depends on your life. For tax purposes, all dollars will be converted to euros. I used to be paid by my clients in EUR, GBP or USD (depending on where they were around the world), to banks in Spain, France and the UK and to PayPal and Wise accounts too. It all got taxed by Spain!
2. The company will pay its taxes (corporation tax etc) locally. You, as a Spanish tax resident working in Spain, will be charged tax in Spain on any income you derive from it (including salary, dividends etc).
3. If you have work rights you have the right to set up as autónomo”
”A bilingual Astoria (paralegal accountant) would be a wise suggestion”
”1) Where do you want to live afterwards? if in USA, then Dollar is better for you. or you just stay in Spain as long as you work? and go back to your country? USA or where? then, is USD better. or do you want to stay in Spain for a long time? then the euro is better. 2) Check first, if your company based on USA(?) automatically withhold your tax in USA. Many companies do this. They withhold the tax from the salary and pay the deducted salary to the worker. And later, the company pays all taxes to the authority. You also need to file a tax declaration about this. if you are a tax resident in Spain. so, if your company withholds the tax in the USA, you need to be careful of double taxation in the USA and Spain. If you want to stay long in Spain working in Spain, you better tax residence in Spain and pay tax in Spain. to avoid the headache problem of double taxation, you can ask your company about this and not withhold your tax in the company and you will pay tax in Spain. However, the tax law in the USA is complicated and one side to the government. You surely get a tax adviser for this”
”I don’t see how it matters, when you withdraw cash from the ATM it will be in Euros anyway”
”1- euro, but with a caveat. It’s better to get paid in euros simply because you won’t have to fool around with converting dollars to euros.
But if your US company says “okay, we will pay you the euro equivalent of 1000 USD a month” and the rate is 1=1, you’ll get used to getting 1000 euros a month.
But what if the rate then changes and it’s only 800 euros equals 1000 dollars? Your paycheck will drop.
It doesn’t hugely matter because if they were paying you in dollars and you were converting those dollars to euros to be able to use them in the EU, you’d still face the same problem; what used to buy you 1000 euros now only gets you 800.
So…don’t overspend.
The other thing to consider is whether you’re going to try and keep some money in the US for retirement plan purposes. It’s difficult because many brokerages or investment companies won’t take overseas clients anymore but it’s doable, and if you think you’re going to retire in the US then having your money in a 401K or IRA (whether Roth or regular on either) or in one of the self-employed investment plans makes sense, because there are bigger tax incentives.
If you think you’re going to retire in the EU/Spain then it gets even more complicated and you need to consult with an expert because different types of plans in the US get whacked with taxes in Spain.
2- neither. It is based on where you do the work. So if you’re doing the work in Spain, then Spain gets first dibs on that income for tax purposes.
But you still have to file US taxes no matter what! The thing is you probably won’t owe anything, because you’ll use either the FEIE to exclude the income you make in Spain or you would get a tax credit for any income taxes you pay in Spain (and that’s almost certainly going to be more than you would owe in the US, so your US tax amount winds up being zeroed out).
One other thing- if you work as a regular employee of a US company, and you live/work in Spain, your company might be on the hook for Spanish payroll/employer taxes.
If you’re a 1099 independent contractor then it’s typically not an issue, but that’s the reason a lot of US companies say you can’t live and work outside of the US.
3- not sure but my understanding is as a partner of an EU citizen you can working in Spain and there’s no change needed in your residency status. Your TIE should say whether you can work and if it does then you’re good to go.
Conclusion
In conclusion, according to Spainguru Facebook group members, whether to be paid in euros or dollars when working for a US company in Spain is a matter of personal choice, with euros often being more practical. Taxation is based on where you work, so as a Spanish tax resident, you’ll pay taxes in Spain. If your US company withholds taxes, consult a tax advisor to avoid double taxation. Switching to autonomo should be carefully considered in terms of visa implications. To maximize income while staying tax-compliant abroad, seek advice from experts and consider long-term financial planning for retirement in the US or Spain.
