Question
We are moving on a Spain non lucrative visa next year but was just told that the tax rate is over 40%? Can anyone give a little more clarity on it for US retirees?
Answers
These are the answers of some Facebook group members:
”It’s more complicated than just saying 40%. It’s likely just slightly more than you’re used to paying in the US but it depends on so many factors. Either contact a tax advisor or just move and deal with it when you have to since there’s nothing you can do about it”
”Everyone’s tax situation is different. You should get professional tax advice in both Spain and your home state”
”I pay %50 but our quality of life is great so definitely worth it”
”Tax rates vary by region”
”Join the neighborhood/town groups where you intend to move and search past posts for accountant recommendations. Ask for a proforma return based on last year’s numbers. When comparing numbers be sure to take into account costs of real estate taxes and healthcare”
”If you are getting paid somewhere in the neighborhood of €300,000 a year, then yes, the tax rate is somewhere around 40%. Its a sliding scale”
”Keep in mind that as a result of the tax treaty between the US and Spain any income tax WE pay to Spain is entered as a foreign tax paid on our US 1040 and as such is applied to any US tax we owe or any refund we are do to receive. However; best to consult a tax expert. For our peace of mind we have all our necessary tax forms: US 1040, FinCEN, Spanish Modelo 100 & 720 done by a competent Spanish Tax Firm”
”Talk to a tax expert, not Bob at the bar. To be clear, taxes in Spain are higher for a lot of things. But saying you’ll pay 40% outright is nothing short of misleading. With regards to income tax for example- Spain is the same as the US in that there is a progressive tax table. So even if you fall into the range of 40%, you are not paying the 40% on your full taxable amount, only a portion of it”
”Spanish income tax rates in 2023
€0 to 12,450 / 19%
€12,451 to 20,200 / 24%
€20,201 to 35,200 / 30%
€35,201 to 60,000 / 37%
€60,001 to 300,000 / 45%
There is a standard deduction of 5550 euros for single filer. Not sure about married couples”
”I can recommend you a tax advisor and also help you with the NLV, I run Help At Hand Spain and offer a free 20 minutes consultation. Feel free to look at my reviews and do get in touch”
”My hope is to live in Spain 182 days a year. Tax rates are brutal. Portugal is much more expat tax friendly but it’s not Spain”
”Explore the Beckham law: The Beckham law in Spain is a special tax regime that enables foreigners who move to the Spanish territory to pay a flat fee of 24% only on the incomes they obtain in Spain instead of a progressive tax on their worldwide incomes (19-45%)”
”Maybe taxes are higher but depending on where you are moving from your expenses will likely be at least 40% lower. So taxes are really the least of your problems IMO”
”Not even close, we are above-average pensioners and we pay about 18%”
”We have government pensions and pay our taxes to USA. We have been here going on three years”
Conclusion
In conclusion, according to Spainguru Facebook group members, the tax rate for US retirees in Spain under the Spain non Lucrative Visa varies and depends on individual circumstances, including income levels and specific regions in Spain.
It’s a progressive system, with rates potentially around 40%, but they vary based on income brackets. Seeking professional tax advice in both Spain and the US is key to understand the accurate tax implications, considering factors like tax treaties and special regimes like the Beckham Law.
Ultimately, personal expenses and lifestyle adjustments also affect the impact of taxation for US retirees in Spain.
