# US citizens tax issues in Spain



## bomzi508 (Jun 15, 2021)

Hello,
My wife and I are US citizens currently living in India. We are planning on moving to Barcelona on the Non Lucrative visa. Both of us are artists and have savings and income sources in the US and in India.

Since we are US citizens, the US requires us to declare and pay tax on our global income. We pay taxes on our Indian income in India and include that in our tax filings to the US government.

Does Spain have the same requirement regarding global income?
Which country would we have to pay global taxes in, Spain or the US? Both?
Since the US tax levels are lower than Spain, will we have to pay the difference in Spain? How would this work?

I'm not opposed to paying taxes at all. If you make lots of money, you should pay lots of tax! That's one of those "good problems" to have!

I'm just trying to understand how it would work for us.

Greatly appreciate any advice!


----------



## Bevdeforges (Nov 16, 2007)

The US is the only country that insists on taxing their citizens no matter where in the world they live. I assume you are taking the Foreign Tax Credit on your income from India - but if you're working in India and drawing wages, you may also be using the Foreign Earned Income Exclusion to avoid double taxation.

There is an income tax treaty between the US and Spain and that will determine how you avoid double taxation and which country will have the "primary" claim on taxing your income from various locations. 




__





Spain - Tax Treaty Documents | Internal Revenue Service


Spain - Tax Treaty Documents




www.irs.gov





Depending on what kind of income you are getting (i.e. salary, investment income, rental income, pension etc.) normally your country of residence gets first dibs, though not always. The "other" country may grant a tax credit in the amount of tax you paid to your country of residence, or they may have a different way of handling things. But in any case, you usually can avoid paying double taxes on the same income, though in total you may wind up paying the higher rate on any given amount of income.


----------



## Moulard (Feb 3, 2017)

Taxation of your US sourced income would be governed by the US-Spain tax treaty which Bev has linked to above. As you are aware the US will tax you on your global income by virtue of your citizenship, and this will continue. If you are not earning any income in Spain given the non-lucrative visa, then your US taxes are not likely to be impacted much - except perhaps reporting Spanish bank account and interest reporting.

I am not familiar with Spanish taxes, but I would assume that once you are a tax resident of Spain you would report your global income to Spanish tax authorities by virtue of your tax residency. 

Taxation of your Indian sourced income would be governed by the India-Spain tax treaty. A quick skim of the new protocol that came into force in 2019 suggests that for Indian sourced income or capital gains Spain will allow a deduction from Spanish taxes equal to the amount of income tax paid in India.

The India - Spain tax treaty can be sourced here...





International Taxation >Double Taxation Avoidance Agreements







www.incometaxindia.gov.in





On the Indian side, once you are no longer deemed a tax resident you Indian sourced income would be taxed at the Non-Resident rate.


----------



## bomzi508 (Jun 15, 2021)

Thank you for the great info! I'll look through these and have a chat with my ca.


----------

