# Tax in Spain



## dwilli4589 (Aug 17, 2019)

I'm a US citizen thinking of moving to Spain full time for 5-10 years upon retirement in a couple years. I'm trying to understand how taxation works in Spain for a full time expat resident. I have a military pension, my wife has a teachers pension, we have a 401K we may pull from and Social security. What I read is Spain taxes all incomes, but I have'nt found anything that defines income. Will our pensions be considered income? What can we expect to be taxed (e.g. tax percentage)?

Any help/advice is appreciated


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## MataMata (Nov 30, 2008)

Not quite sure how the word 'income' can be the source of doubt or confusion, it's very simply all the money you earn or receive - or which 'comes in' if you prefer - in the course of the tax year and clearly that includes money from pensions whatever their source.

The tax system in Spain is quite complicated (isn't it everywhere!) and it's not really possible to express in simple percentage terms.

Taxation is split between state and regional and helpfully (not) both have different bands and rates and of course the regional rates vary across the land. Once you have determined the bands and rates applicable in your own region the first task is to work out if it's to your advantage to be taxed jointly as a couple or singly.

As a very rough indication I recently did a single tax calculation for somebody and on an assumed income of around €20k they would have been facing a tax bill in the region of €2,300, bumping that up to €35k however increased the tax bill to around €6,500 so it's anything but linear.

On the bright side for anybody with just one single pension of under €12k it's not necessary to submit a tax return at all.

Initially at least I would strongly suggest you engage a professional to do your tax return, once you've seen it done you should may feel confident to do it yourself.


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## Nakabandi (Jul 25, 2019)

MataMata said:


> Not quite sure how the word 'income' can be the source of doubt or confusion, it's very simply all the money you earn or receive - or which 'comes in' if you prefer - in the course of the tax year and clearly that includes money from pensions whatever their source.
> 
> The tax system in Spain is quite complicated (isn't it everywhere!) and it's not really possible to express in simple percentage terms.
> 
> ...


A good post and good advice.

All I would add is make sure you get a good professional tax advisor. In Spain a lot of so called professionals operate hap hazard with little concern about accuracy. Don’t forget when filing a tax return the buck stops with you and not your well paid advisor.


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## Phil Squares (Jan 13, 2017)

If you have income in the US which is subject to US income taxes, you will have to declare that on your Spanish taxes. However, the US and Spain have a tax treaty and what you pay in the US will be recognized in Spain and you will pay the difference if any. 

Social Security is not taxable in Spain and, according to our account here and in the US, is non-reportable as income in Spain. Depending on what type of pension you have that will determine the liability for taxes. I am pretty sure any 401K withdrawals will be taxable, but you get a much higher threshold for taxable income in the US as an expat. I would recommend speaking with a tax advisor before you make the move.

Remember, as a US citizen, it is much more difficult to move to the EU and you will need a visa for residency which would be issued before you moved here.


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## dwilli4589 (Aug 17, 2019)

Nakabandi said:


> A good post and good advice.
> 
> All I would add is make sure you get a good professional tax advisor. In Spain a lot of so called professionals operate hap hazard with little concern about accuracy. Don’t forget when filing a tax return the buck stops with you and not your well paid advisor.


My wife and I are planning a trip to Spain next year to begin planning for the future move. Any suggestions on how to find a "good professional tax advisor" to talk to?


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## DonMarco (Nov 20, 2016)

MataMata said:


> Not quite sure how the word 'income' can be the source of doubt or confusion, it's very simply all the money you earn or receive - or which 'comes in' if you prefer - in the course of the tax year and clearly that includes money from pensions whatever their source.
> 
> The tax system in Spain is quite complicated (isn't it everywhere!) and it's not really possible to express in simple percentage terms.
> 
> ...


Allow me to muddy the water. Its possible to receive regular payments that isn't income. i.e. money received from managed funds that is treated as capital repayments. But as you say, your financial adviser will/should advise you.


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## snikpoh (Nov 19, 2007)

DonMarco said:


> Allow me to muddy the water. Its possible to receive regular payments that isn't income. i.e. money received from managed funds that is treated as capital repayments. But as you say, your financial adviser will/should advise you.


.. but that's still income:

Definition of income - "money received, especially on a regular basis, for work or through investments"


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## blondebob (Aug 16, 2019)

Nakabandi said:


> A good post and good advice.
> 
> All I would add is make sure you get a good professional tax advisor. In Spain a lot of so called professionals operate hap hazard with little concern about accuracy. Don’t forget when filing a tax return the buck stops with you and not your well paid advisor.


Very sage advice, getting a good bi-lingual tax advisor is worth it


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## snikpoh (Nov 19, 2007)

blondebob said:


> Very sage advice, getting a good bi-lingual tax advisor is worth it


... and if you can't find a good tax adviser who's bi-lingual - take an interpreter.

Far better to have a good adviser than one who speaks your language and gives bad advice!


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## blondebob (Aug 16, 2019)

snikpoh said:


> ... and if you can't find a good tax adviser who's bi-lingual - take an interpreter.
> 
> Far better to have a good adviser than one who speaks your language and gives bad advice!


In my experience any top firm of tax advisors worth their salt will have various partner's on their books who are fluent in a range of languages pertinent to the relevant office location.


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## NickZ (Jun 26, 2009)

MataMata said:


> Not quite sure how the word 'income' can be the source of doubt or confusion, it's very simply all the money you earn or receive - or which 'comes in' if you prefer - in the course of the tax year and clearly that includes money from pensions whatever their source.



Not really.

The OP mentions a military pensions. Often the tax treaties only allow the paying country to tax these.

The teachers pension if it's a government employee pension may also be US only. It might not if it's a state pension or local pension.

The 401K might be covered by the social security treaty. 

The OP needs a tax lawyer who deals with international tax.


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## Brutus85 (Dec 21, 2019)

Have been “considering” retirement is Spain (Barcelona) too. I’m a retired American federal employee with federal pension, federal social security, and federal 401k monthly disbursement as income. I will not need to work. All income comes from US government as retirement income. 

This has been total pain in the butt to get a handle on. Tax law is very specific and cryptic & everyone’s situation is different. I just didn’t want any MAJOR surprises. Here’s what I found: US social security and US federal pensions are covered by US-Spain on Double Tax treaty. I pay any taxes on them to the US, not Spain. That was a big relief! I’m “pretty sure” my 401k monthly disbursements falls into the same category. It’s part of my retirement and managed by a Federal agency & federal taxes are taken out. 

That was my big concern. Don’t mind paying taxes, even slightly higher ones. But didn’t want to step into any major holes. Most of the articles I read (tons!) on living abroad kinda gloss over or not mention taxes at all. I would definitely like to read other expat’s experiences with taxes. Or, if anyone has additional info or corrections, please share.


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## philsego (Feb 11, 2020)

I know this is an old thread, but this is a BIG issue for my wife and I, who will be moving from the USA to Madrid in a few months.

I've been emailing a few "tax advisors" in Spain and haven't yet found someone who has said something like "yes, this is our specialty" or _anything_ that gives me confidence. Has anyone here found someone they like who (a.) has reasonable fees and (b.) speaks some English? We're both fluent, but Spanish financial terms are a bit outside our lexicon.

Your advice would be appreciated on either a specific referral or how to find someone (eg. asesor fiscal) who can assist us?

Thanks!


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## Pipeman (Apr 1, 2016)

I've spent some time discussing tax details with:

[email protected]
+34 965 70 55 02

He's very knowledgeable


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## 95995 (May 16, 2010)

dwilli4589 said:


> My wife and I are planning a trip to Spain next year to begin planning for the future move. Any suggestions on how to find a "good professional tax advisor" to talk to?


Try AARO - the Association of Americans Resident Overseas https://www.aaro.org/


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## Randy&Kathy (Feb 11, 2019)

Thank you for this thread, mostly confirming what I have been able to find out, but nothing ever seems certain.

Does anyone have experience with a Dual US/EU member (not Spain) citizen living and working in Spain. Initially all income my wife receives will be earned from her work as an autonimo in Spain, which seems pretty clear that it is subject to Spanish taxes. What is the effect with regard to the other EU country? Eventually she, like myself, will also draw Social Security, which appears to be taxed in the US.


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## 95995 (May 16, 2010)

Randy&Kathy said:


> Thank you for this thread, mostly confirming what I have been able to find out, but nothing ever seems certain.
> 
> Does anyone have experience with a Dual US/EU member (not Spain) citizen living and working in Spain. Initially all income my wife receives will be earned from her work as an autonimo in Spain, which seems pretty clear that it is subject to Spanish taxes. What is the effect with regard to the other EU country? Eventually she, like myself, will also draw Social Security, which appears to be taxed in the US.


It might well be worth you asking the question on Expat Tax Forum https://www.expatforum.com/expats/expat-tax/


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## Isobella (Oct 16, 2014)

Why not try these. My friend was in it until she moved.

American Club of the Costa del Sol - The Association of American Clubs


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## DonMarco (Nov 20, 2016)

snikpoh said:


> .. but that's still income:
> 
> Definition of income - "money received, especially on a regular basis, for work or through investments"


Seeing that this thread has gone live again...........Wrong! capital repayment is not Income.
i.e. Regular repayments of your capital invested in managed funds are not income. 

No interest or dividends are paid out over the livetime of the fund but may (hopefully) attract capital gains at the end of the contract.


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## baldilocks (Mar 7, 2010)

DonMarco said:


> Seeing that this thread has gone live again...........Wrong! capital repayment is not Income.
> i.e. Regular repayments of your capital invested in managed funds are not income.
> 
> No interest or dividends are paid out over the livetime of the fund but may (hopefully) attract capital gains at the end of the contract.


But if you have an annuity which is really only repaying your own money, you are taxed on it.


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## NinaFII (Mar 3, 2020)

Phil Squares said:


> If you have income in the US which is subject to US income taxes, you will have to declare that on your Spanish taxes. However, the US and Spain have a tax treaty and what you pay in the US will be recognized in Spain and you will pay the difference if any.
> 
> *Social Security is not taxable in Spain and, according to our account here and in the US, is non-reportable as income in Spain.*


Are you saying US Social Security income is non-taxable for Spanish residents? Are you receiving US SSI and sure about that? That's not what I'm seeing on other sites.


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## Phil Squares (Jan 13, 2017)

It is not taxable income by Spain. And yes, I am receiving US SSI. It is deposited into a US bank and it pretty much stays there. The taxation issue is covered in the US-Spain tax agreement and social security agreement. Otherwise, you would be paying tax twice on the money. Since I have dual citizenship (US/Ireland), I have to pay tax on my earnings in the US and if there is no tax due, I still have to file a tax return. My wife, who works as a teacher here pays Spanish taxes and SS and she too has to file a US tax return and she does not pay US tax on her Spanish income. In addition, the same treaty will allow her to collect her Spanish pension because the treaty allows work in the US to be counted towards the required years of employment in Spain.


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