Question
My wife, daughter, and I will be spending one year in Spain (my wife is a US citizen, and my daughter and I have Spanish citizenship). My wife is a W2 employee who can work remotely for a US employer, and she will get her residency through me shortly after we arrive. Will she have to pay taxes in Spain? How does it work? We would appreciate any advice or a referral to a tax professional with knowledge of this type of situation. Thank you so much.
Answers
These are the answers of Spainguru’s Spain Digital Nomad Visa group members:
“Yes. At the very least, depending on the bracket, she’ll have to file. Filing taxes, like in the USA, does not always equate to paying. The key is more (in my opinion) to arrive debt-free, with liquidity, and be conscious of the exchange rate, which is truly more of a ‘problem/shocker’ than taxes.”
“As a W2 employee working remotely from Spain, she will not meet her social security obligations in Spain unless her company registers as a foreign entity with the Seguridad Social for her or she switches to a 1099 contractor situation.”
“You can vastly reduce your tax liability for this one year by coming after July 4 and leaving the following year by June 30. As for W2 work, it gets a little more complicated and varies on several factors.”
“I would also recommend double-checking that she can work remotely from Spain as a W2 employee. You have the 182 days that she can work before paying taxes, but after that, the employer would have to be set up as a Spanish employer. It has been recommended that a way around this would be to work as a contract worker.”
“My understanding is that to be a W-2 employee, you need to be a resident in the US. Once you’re in Spain for 183 days, you’re a Spanish tax resident, and you’re not a US resident anymore.
My company is allowing me to work from Spain too, but based on the research they’ve done and I’ve done, they’ll have to pay me on a 1099 basis. You should double-check this before any issues come up. This would obviously change if the company has a branch in Spain.”
“The most important factor for her will be her employer. The company she works for is responsible for her and will have to file paperwork on her behalf. They might have to establish a Spanish entity to have her work in Spain.
Alternatively, she could switch to being a contractor/freelancer, which would make things easier. She wouldn’t need their permission, and the company wouldn’t need to establish an entity.”
“She can absolutely work on W2 and get paid in the US. There is no need to change anything. There is no need to be a contractor or establish a legal entity.
She will need to file a tax report in Spain and pay taxes here on her US salary – likely more than in the US because the brackets here are different
For every Euro she pays in Spain she gets a credit against her US tax liability.
As for SS – since she won’t be paying into the public system, she won’t be eligible for public health insurance or pension. That’s what private health insurance can address (it’s vastly cheaper than in the US).
All of the above is true if she becomes a tax resident in Spain (different than being a resident). Staying more than 183 days or having kids in school is likely sufficient to establish tax residency.”
“Your wife could also look into hiring an employer of record based in Spain that contracts her back out to her original company. My husband did this for his remote job in the US, and it worked great.”
“After 183 days of residing in Spain, she becomes a fiscal resident. It can be a problem. I suggest consulting a lawyer or tax expert to ensure compliance.”
Conclusion
Based on the Spainguru Facebook group, your wife will likely need to pay taxes in Spain if she resides there for over 183 days, as she will be considered a tax resident.
While she can technically work as a W2 employee, this may require her employer to register as a foreign entity in Spain. Another alternative would be to shift her employment to a 1099 contractor arrangement to simplify compliance.
Switching to contractor status may offer more flexibility and ease, though she will need to consider the tax implications and possibly negotiate additional compensation to cover the higher tax burden as a contractor.
Consulting a tax and immigration professional familiar with Spanish and US regulations is strongly recommended to navigate these complexities and avoid potential legal or financial issues.
Disclaimer
This article is based on the contributions and experiences shared by members of the Spainguru community and is for informational purposes only. It does not constitute legal, financial, or tax advice. For personalized guidance tailored to your specific situation, we strongly recommend consulting a qualified tax professional or immigration lawyer familiar with both Spanish and US regulations.
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