Question
Does Spain tax our Social Security Retirement (SSI retirement) from America if we become residents?
Answers
These are the answers of Spainguru’s Facebook group members:
“Taxpayers must report their U.S. Social Security benefits in their annual tax returns in Spain so that they can offset the tax paid to the United States against their tax liability in Spain. There might be additional taxes foreigners are obliged to pay, these include Americans too.”
“Spain and the US have a dual taxation treaty. See here: IRS.gov – Spain Tax Treaty Documents“
“Spain taxes you on everything ????”
“That is why so many people still want to retire there. There must be something they do right.”
“Here you can find tax experts both for tax filings in Spain and in the US: SpainGuru.es“
“The answer is yes, Spain regards SS payments as pensions. SS payments are taxed like wage income in Spain.”
“Not to be confused with Public Pensions for Civil Servants that are tax-free.”
“My Spanish wife is a retired civil servant, and she definitely pays tax on her pension income.”
“Taxes are only paid to the originating country where the public pension comes from. So for your Spanish wife who gets a Spanish public pension, there is no escaping Spanish taxes.”
“Taxes on pensions are not paid only to the originating country. A taxpayer has to comply with the tax laws of the country in which he/she is a tax-resident. In addition, if you are a citizen of the USA or Eritrea you are also required to pay taxes regardless of where you are a tax-resident.”
“Yes, they will be taxed as employment income (between 19% and 47%). Only pensions derived from public functions will be exempt.”
“SSI is disability. Is that what you meant?”
“I’m a Canadian; Canada has a double tax treaty with Spain. Doesn’t the US have the same arrangement? My government pensions will take 15% off the top. The homework I’ve done says Spain can’t tax my pensions further and the pensions will not be included in my overall income for the year.”
Conclusion
U.S. Social Security retirement benefits are considered pension income in Spain and are subject to taxation.
However, due to the U.S.-Spain double taxation treaty, taxes paid in the U.S. can be offset against Spanish tax liabilities.
There are special provisions for public pensions, where taxation may only occur in the country of origin. For U.S. expats, it is crucial to understand how these treaties work and possibly consult with a tax advisor to ensure compliance and optimize tax obligations.
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