# Some pitfalls in moving to Spain for US residents



## Minerva.909 (Jul 29, 2012)

I guess relatively few people are in that situation, but if you happen to be, beware that moving to most countries in Europe would cost you over 25% of your US pension, as it would be a subject to the non-resident alien 30% flat tax (on 85% of your pension), when you no longer can - or care to - flying to the USA for at least 31 days a year and spend there a total of 183 days within a 3 year period. And we haven't even started counting Spanish taxation.... sigh.

In my book that is a tad too big chunk of an income to give up by choosing a "wrong" country ... no matter how lovely, sunny etc. etc. Spain might otherwise be.

If you choose Italy or Ireland or UK or Germany or Romania you avoid this tax entirely (listing only EU countries), while by choosing Switzerland you'll limit it to 15%.

This rule concerns only non-US citizens with US pensions, who would be giving up their permanent residency in the USA by not visiting US often enough and for long enough time - it does not affect US citizens.

Thus, planning for the old age, I have to rethink the choice of Spain... unless the tax treaty changes. :-(((


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## neddie (Jun 11, 2012)

Minerva.909 said:


> I guess relatively few people are in that situation, but if you happen to be, beware that moving to most countries in Europe would cost you over 25% of your US pension, as it would be a subject to the non-resident alien 30% flat tax (on 85% of your pension), when you no longer can - or care to - flying to the USA for at least 31 days a year and spend there a total of 183 days within a 3 year period. And we haven't even started counting Spanish taxation.... sigh.
> 
> In my book that is a tad too big chunk of an income to give up by choosing a "wrong" country ... no matter how lovely, sunny etc. etc. Spain might otherwise be.
> 
> ...


Rather disheartening news for some......do you know if it applies to Portugal as well? Do you have a link for this info? Is this a tax levied in the US or Spain?

Fortunately it wouldn't apply to me.


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## NickZ (Jun 26, 2009)

Usually if you go the US embassy website for the country in question they'll have a guide on where you pay.

Outside of that you have both the double taxation treaties and if there is a social security agreement.

The with holding would off set any Spanish tax payable so it's not in addition to.


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## Merticus (Sep 21, 2012)

I am sorry, for some reason this post confused me.

If a retiree draws VA Disability, would that be taxed?
And, how much time must be spent in the U.S. yearly?


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## xabiaxica (Jun 23, 2009)

Merticus said:


> I am sorry, for some reason this post confused me.
> 
> If a retiree draws VA Disability, would that be taxed?
> And, how much time must be spent in the U.S. yearly?


:welcome:

you'd really be better off asking this sort of specific question here Expat Tax - Expat Forum For Expats, For Moving Overseas And For Jobs Abroad


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## Merticus (Sep 21, 2012)

Thank you for the link


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## NickZ (Jun 26, 2009)

Merticus said:


> I am sorry, for some reason this post confused me.
> 
> If a retiree draws VA Disability, would that be taxed?
> And, how much time must be spent in the U.S. yearly?


VA disability I guess is a military pension and there fore taxed in it's home country.

What Minerva was discussing is the non resident alien with holding. It doesn't apply to Americans. Only aliens.


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## Bevdeforges (Nov 16, 2007)

I thought I had posted something on this yesterday, but apparently I didn't hit the right button.

If it's US Social Security retirement benefits you're talking about, the rules are a bit complex, but you can find out your status here: Receiving Social Security benefits when living overseas

If you are a US citizen, there is no requirement to return to the US periodically. And if you are a citizen of some 20 or so other countries that have a SS treaty with the US, then the only restriction on drawing US SS payments is that you not be living in a country they cannot be sent to. (Cuba, Vietnam, and a few others.)

Normally your US social security is only subject to US income tax if you are a US citizen married to a non-resident alien and thus filing as married filing separately. Or if you're drawing early SS benefits and you have significant other income.

Survivor or dependent benefits have other rules - see the Social Security Administration website for those.

VA pensions - check the VA website, but if you're a US citizen drawing benefits, it's really unlikely there will be restrictions like having to return back to the US. Contact your local US Consulate for information.
Cheers,
Bev


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## Merticus (Sep 21, 2012)

NickZ said:


> VA disability I guess is a military pension and there fore taxed in it's home country.
> 
> What Minerva was discussing is the non resident alien with holding. It doesn't apply to Americans. Only aliens.


Veterans Disability isn't taxable in the U.S. just like SSDI isn't. I receive a statement every year of what was earned but no tax is due.


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## NickZ (Jun 26, 2009)

Ya but that's the US government's choice. What I'm saying if it's considered a military pension the choice belongs to the government that pays it.

Spain (unless the US/SPain treaty is wierd) won't tax non Spanish military or other government employee pensions.

What the US does doesn't change things.


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## Minerva.909 (Jul 29, 2012)

Bev's info is basically correct, but not complete. Yes, as a non US citizen with a US social security benefits you are entitled to these benefits if you live overseas in most countries (they are only few exceptions) and you are NOT required to return to the USA periodically. *However, if you abandon your US resident status (for example by being outside US for more than 365 consecutive days, or fail to submit a tax return), these benefits will be taxed * if you live in any countries other than specifically exempt, and there are only a few exempt countries (which I partially listed in my original post). It is a US non-resident alien tax. Spanish taxes are a different matter.


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