Question
Does anyone here have experience working a U.S. remote job in Spain and using a VPN? And if you use a U.S. address for work purposes how does that impact taxes if you have residency or citizenship?
Answers
These are the answers of Spainguru’s Facebook group members:
“If you’re a Spanish (tax) resident, you are supposed to report your worldwide income in Spain.”
“183 days of the year of resident = pay taxes”
“You can get away with it for about a year if you’re lucky but after that, Spanish income tax becomes a real issue”
“If you do the work in Spain, you are supposed to pay the taxes first in Spain. Then you do your US tax return, take either the FEIE to exclude your income or take a tax credit for the amount you paid in Spain, and that’s it.
For most cases, your Spanish taxes paid will be more than your US tax amount, so you would wind up owing zero to the US. Note: in the US they probably would have withheld money from your paycheck.
So you would get that back when you file your return. Second note: in most cases, if you are an employee of a company (vs being a 1099 independent contractor), your company has legal obligations in Spain.
They’d have to set up an entity to pay Spanish payroll and other taxes, etc etc etc. So most companies will not let you be a regular employee in Spain, because they don’t want to do that stuff- and if you go there and work from there, you’re exposing the company to significant risk of fees and fines and taxes.”
“Why do you need a VPN….? Surely not trying to pretend you are in the US?)” Answer: “Yes but only because I need to create a secure tunnel to our server, not because I’m trying to hide my location (VPN provided by my company).”
Conclusion
Working a remote job from Spain for a U.S. employer involves navigating complex tax implications and understanding company policies. Tax residency in Spain requires the reporting of worldwide income, with specific conditions for taxation based on the duration of residency.
While a VPN may be used for secure connections, it’s not recommended for misrepresenting location due to legal and tax considerations.
Additionally, the feasibility of such arrangements often depends on whether the U.S. company has an operational entity in Spain, which can significantly impact the ability to comply with local labor laws and tax obligations.
This conversation underscores the importance of legal and tax planning for remote workers in Spain, as well as open communication with employers about potential implications.
