Question
I need help understanding the tax situation being an American doing the Spanish Digital Nomad Visa. I’m needing to switch my contract at job for ‘independent contractor’ and I have to register as an ‘Autónomo’ in Spain. Have you done this? How was your experience with the tax situation back home?
Answers
These are the answers of Spainguru’s Facebook group members:
“You will continue paying taxes in the US depending on how you set up your independent contractor business. As a sole proprietor, you’re required to pay self-employment tax (about 15.3%), which includes both the employer side and employee side tax.”
“You are supposed to pay estimated quarterly income tax every 3 months e.g., January 15, April 15… In Spain, you set up autonomo and will pay 20% income tax quarterly as well.”
“You also pay social security tax in Spain. 80 euros monthly for the first year and then the amount is based on your income after the first year.”
“You could file an extension in the US. At the very least, you will need to file in Spain first. What you pay in Spain will be used as a tax credit (foreign tax credit) to your US filing.”
“You will also need to file an FBAR in the US if the aggregate of your accounts abroad exceed $10k.”
“You can avoid paying self-employment tax in the US if you can provide proof of coverage in Spain or you can avoid paying SS tax in Spain if you can provide proof of coverage in the US.”
“Autónomo SS does provide sick pay, disability, and a form of unemployment benefits as well, provided you’ve paid in long enough.”
“It’s NOT possible to avoid paying SS in Spain and continue to pay SS in the US when you apply for the DNV, nor after, once approved.”
Conclusion
The discussion in Spainguru’s Facebook group provided detailed insights for American expats navigating the complexities of tax compliance when working as independent contractors and registering as “Autónomos” in Spain.
The key takeaways include the necessity of continuing to pay taxes in both the US and Spain, understanding the specific obligations related to social security taxes, and the potential to leverage tax treaties to avoid double taxation.
The conversation underscored the importance of professional tax consultation and thorough preparation for expats to ensure compliance with tax regulations in both countries.
You can find vetted tax advisors on Spainguru.es both for filings in the US and Spain.
