# Want to "be" in Spain with non-lucrative visa but keep tax home USA



## lashend

Hi everyone, and thank you very much if any of you can help me satisfy this nagging doubt - I’ll be very grateful, thank you!

I’m a new-ish freelancer, and I’m preparing to move overseas (permanently?) in April. I’m awaiting (with fingers crossed) my Spanish visa now. In the past year, I’ve tried to put things in place so that I can “operate” financially as simply as I can and (of course) remain compliant with all the immigration and tax laws of both USA and Spain. I think that I have it figured out, but I’ve been doing a lot of reading this month, and I have some nagging doubts. 

Here’s my situation: 
•	I am a USA citizen. I have a pretty simple professional-fiscal existence. I want to be “like” a digital nomad but – and this is the tricky part – be physically present in Spain during the entire year without establishing Spain as my tax home (and instead keep my tax home as the USA).
•	(Why?) I have applied for a non-lucrative visa to Spain. So I will have the right to live in Spain (full-time, full-year) but not the right to work in Spain: I must generate my income from overseas. (So, among other things, this means that I will not pay my income taxes to Spain but rather to the USA.) 
•	This year I have begun growing my freelance work (in “language services,” in case it’s relevant: translation, editing, critical revision, and related). My clients come from all over the world (primarily from the USA and from Italy this year, though next year it could be an altogether different client mix). I work at my computer and always work remotely. 

What I would like to do and still plan to do:
•	Continue working as a remotely based freelancer. Continue to consider the USA my tax home. Continue to consider myself as a “US-based freelancer” … but (just happen to) do all my work from an internet connection in Spain. 
•	I do not plan to register myself as a “sole proprietorship” but instead to file taxes simply as an independent contractor via Schedule C of the (IRS’s) Form 1040. 
•	I plan to file: 
•	1040
•	Schedule C (Self-Employment Income)
•	The FBAR (to report my Spanish bank account via the FinCEN mechanism). 
•	And, because I am still considering my tax home to be the USA, I will also continue to pay state taxes in my last state of residence, Indiana. 
•	>>> Do I understand all that correctly? 
•	(I do not hold any foreign corporations or stocks, I don’t have any children, I don’t need to worry about retirement etc etc … So I don’t need to get too complicated here, I just want to be sure that I’m carrying out my very basic freelancing work in fiscal and legal compliance.)

Questions I’d like to confirm: 
•	Is my plan “correct” and compliant? Is there any legal/fiscal problem there? 
•	Do I need to take any special precautions as I prepare my forms to submit to the IRS? 
•	For example, do I understand correctly that I should not claim the FEIE? (Because I do want to consider the USA my tax home – not Spain.) Will it be problematic that I will satisfy the “physical presence test” and not claim the FEIE? 

I think I’m understanding things correctly here, but – again – I’m not certain and have a nagging doubt that I’d be relieved to settle. If the answers seem straightforward to you, I’d really appreciate your advice. Or if you could point me to a great, “authoritative” resource on these sorts of questions, I’d be just as grateful. 

Thank you! 

Best wishes, 

Leah


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## Nononymous

lashend said:


> •	Is my plan “correct” and compliant? Is there any legal/fiscal problem there?


In a word, no. You cannot live indefinitely in Spain (or any other country) and stay out of the local tax system. Back up for a minute and think about the implications - you would be using local government services, potentially one day sending kids to public schools, and so on. You cannot live in one country and choose to pay taxes to another because it's more convenient for you. This has nothing to do with the fact that your clients are offshore and you're not competing in the local labour market.

From what I understand of the non-lucrative visa, it was intended for individuals with savings or passive income who wanted to spend a year or two in Spain. The authorities may now be granting them to those who can support themselves by working remotely, but I expect they would not continuously renew. 

Digital nomads, in the classic sense of the term, work remotely while moving from place to place on tourist visas. Sometimes they settle in a country and make border runs every 6 or 12 months to renew the visa but there's a certain insecurity in that, and technically the working is illegal though I'm sure the authorities turn a blind eye.

If you get the non-lucrative visa, you're probably fine staying out of the Spanish tax system for a year, maybe two. Any longer and you'd need to be compliant, but it's also hard to imagine them endlessly renewing the visa. I have no idea if there's a Spanish equivalent of the German "freelancer visa", and whether that would be granted for purely remote work.

Finally you need to consider health insurance. You can't use the Spanish health care system without paying contributions, which requires that you be in the tax system, I believe.

For details of this go ask in the Spain forum. But I would not start out by saying it's your wish to live in Spain forever while paying all your taxes in the US, because they will blast you out of the water. Ask how you might be able to get the appropriate visa and set up to pay into the system.


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## Bevdeforges

Pretty much what Nononymous says. To put it simply, you don't get to choose where you are "tax resident" - it depends entirely on the laws of the country you are in (and, for US citizens, you're always "tax resident" in the US, subject to any tax treaty provisions for the country in which you are physically located). 

I'm assuming that Spain is one of those countries where you declare your worldwide income for tax purposes - usually you only need 183 days in a year in-country to be considered tax resident (though the requirements vary from country to country and there are other considerations). Even on a visa/residence permit that does not allow you to work, you are generally expected to file a tax declaration.

As far as the US is concerned, they'll take your money only too happily (including the last state you lived in) and chances are you won't be able to get it back once you've paid in, even if you change your mind and decide to amend your returns.

Also, under international conventions, you are considered to be working in the country where you are physically located at the time you do the work. It does not matter where your customers/clients are, nor what currency you are paid in nor where your funds are banked.
Cheers,
Bev


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## Nononymous

There is this common misconception that you need to pay tax somewhere, and as long as you're paying it to one country it doesn't really matter which one. That is not the case.

One of the few advantages to awful US citizenship is that to claim the FEIE, you don't need to prove tax residency somewhere else. So digital nomads who are willing to tolerate some risk and instability can shift around, working remotely while on tourist visas, and if they stay out of the US long enough, not pay the IRS a dime.

For the original post, my hunch is that one year, maybe two, is all you'd get for a non-lucrative visa, and most likely they'd look the other way and not care about taxes. But at some point they'd either stop renewing the visa or inquire about where and to whom income taxes were being paid.


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## lashend

Dear Nononymous and Bev, 

Thank you both very much for your replies. Both were helpful and kind  

To answer a few doubts, in quick form anyway: 

-	Health insurance: Yes, I did have to (already) buy health insurance coverage (in order to get the non-lucrative visa). 
-	Something like Germany’s freelancer visa: It’s not exactly the same thing in Spain, but – from what I gather – it’s usually a lot easier to change from one visa type to another during the renewal process (Year 2) than it is to get the initial visa, and that’s what I hope to do. You can register as an autónomo in Spain, a self-employed/contractor/freelancer, and I’m trying to figure out how to do that (in the Year 2 renewal process) without earlier violating (in Year 1) the not-working terms of the non-lucrative visa that I’ll enter with. 

A few follow-up questions if you don’t mind (and again, thank you very much): 

Nononymous … Thanks for the nudge, I will go ask in the Spain forum, too. And good tip on how to frame my question – especially since that really *is* what I want to do! 

In your second post (thank you for both), what you write about the FEIE and digital nomads makes it sound that it’s possible to pay taxes *nowhere*. (Aha. I think I get it now: that’s part of the point of being a digital nomad?) Just to be clear: that means that, if I’m working on foreign soil for 330+ days, and **even if I’m not paying foreign tax on that income**, I *still* get to exclude that amount from my debt to the IRS (by claiming the FEIE)? In other words, “that’s how it works” and it’s legit to do that? (To be clear: I’d like to get myself in a position where I *can* pay Spanish tax on that income; but I’m fearful that I can’t do that without jeopardizing my immigration status during Year 1 because of the terms of the non-lucrative visa.) 

Bev … you write that even if you do not have the right to work, you are usually expected to file a tax declaration. Is that right!? That’s not a tip-off to the fiscal authorities that, there you are, sitting on Spanish soil and realizing your work via a Spanish internet connection, violating the terms of the not-working/non-lucrative visa? That’s what I had feared. A

I’ll be there for 183 days, without question, and if I should file a tax declaration – and if can do that without getting penalized for violating my visa status – I definitely want to do that. (I want to establish my fiscal presence and compliance as soon and as “correctly” as I can, so that, when I go to ask for the residence-with-work/autonomo visa and status during the renewal process, they’ll say yes.)

You’ve also cleared up the point about considered to be working in the country *you are in*, for 183+ days, regardless of where your clients are. Can you tell me the name of the international convention you mention that I should look to as the “authoritative reference” on this? 

Again, thank you both very much for your responses. They’re very helpful. You can tell I’m not very experienced in this and am trying to figure things out as I go along. Thank you!


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## Nononymous

Two replies:

For digital nomads, it's quite possible to pay no taxes. From a US perspective it's completely legit to stay out of the country, claim the FEIE and owe the IRS nothing. From the host country's perspective it's undoubtedly illegal, but the authorities are either unable to stop it or don't particularly care. Some get around this by moving changing countries once or twice a year, always tourists, never putting down roots; others try to settle somewhere and do border runs to renew their tourist visas, trusting that they won't ever be caught or denied. This doesn't work well in Europe, due to the 90-in-90-out Schengen rules, but seems to be somewhat possible in SE Asia and Central America.

As for Spain, on what basis are you applying for a non-lucrative visa? On the basis of supporting yourself with remote (non-Spanish) work, or on the basis of savings? If the former, working, then register as an autónomo and enter the tax system as soon as you can (and use the FEIE to avoid US taxes) and see what you can do come renewal time. If the latter, savings, then you are violating the terms of the visa by working, so not a good way to start if your intention is to stay. It's a bit of a Catch-22 I suppose.


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## Nononymous

lashend said:


> You’ve also cleared up the point about considered to be working in the country *you are in*, for 183+ days, regardless of where your clients are. Can you tell me the name of the international convention you mention that I should look to as the “authoritative reference” on this?


I'm not sure there is a convention. It's like gravity - it just is.

And 183 days is a guideline, not a firm rule. You move to Germany with the intention of staying permanently (i.e. you have a work permit and a job) and your tax obligations begin on arrival. If you go to France or Spain on a non-lucrative visa for a year, de facto they don't expect you to file a tax return.


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## Bevdeforges

> Bev … you write that even if you do not have the right to work, you are usually expected to file a tax declaration. Is that right!? That’s not a tip-off to the fiscal authorities that, there you are, sitting on Spanish soil and realizing your work via a Spanish internet connection, violating the terms of the not-working/non-lucrative visa? That’s what I had feared. A


Actually, in most countries the Immigration folks rarely (if ever) communicate with the tax people. Plus, there are always the retirees, who are very often on "no work" visas. It varies by country, but often they need to declare their pensions, even if there is no tax to be paid on it.



> I’ll be there for 183 days, without question, and if I should file a tax declaration – and if can do that without getting penalized for violating my visa status – I definitely want to do that. (I want to establish my fiscal presence and compliance as soon and as “correctly” as I can, so that, when I go to ask for the residence-with-work/autonomo visa and status during the renewal process, they’ll say yes.)


You'll hardly be the first person to do things this way.


> You’ve also cleared up the point about considered to be working in the country *you are in*, for 183+ days, regardless of where your clients are. Can you tell me the name of the international convention you mention that I should look to as the “authoritative reference” on this?


There is no written "international convention." It's simply a sort of standard practice when it comes to determining "where" you are working.
Cheers,
Bev


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## xabiaxica

In Spain, teh tax year runs Jan 1st to Dec 31st. If you are in Spain for 183+ days in that period,
then you're required to make a tax declaration, regardless of where, or how, that income is generated

183 days is a guide - if you have a resident visa for 12 months, then you are resident. 

For tax year 2017, declarations are made May/June 2018. So, maybe, anyone resident tax year 2017, who leaves before May/June 2018, could escape having to do a tax declaration

However, if a non-lucrative visa were issued on the back of the holder working remotely, Spain will likely expect quarterly tax returns from day 1, as for all other self-employed people (like me) since it will be on record that the holder is working.

In Spain, the immigration & tax departments DO communicate.


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## lashend

Shoot. So it looks like I really am in a tricky position: I saved up enough money to meet the requirements for the non-lucrative visa via savings: I’m just switching this year (beginning June 2017) from full-time employment-for-an-institution to being a freelancer, and I can’t, at this point, prove that I make enough on a *monthly* basis to meet the minimum that way). Obviously my idea is: I save up enough so that I can live for two years without batting an eyebrow in the case that “everything fails.” And then the idea of course is to not fail, so that I am, at the end of the year, generating a regular monthly income. But I’m not at that point now, and my non-lucrative visa is on the basis of savings.

It is starting more and more to look like I’m in a tricky position. 

You guys sound pretty experienced with all of this … what would you do in the middle of the “trickiness”? Aside from “just give up”  

Thank you!!


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## Nononymous

My experience is multiple stays of varying lengths in Germany, plus scanning the other forums with an eye to spending time elsewhere in Europe at some point in the future. 

If you are applying for a non-lucrative visa on the basis of savings, then the expectation might be that you are not going to work, in any fashion. However, we know that Spanish consulates in the US have been granting non-lucrative visas to people planning to work remotely for a year. 

In light of that, what I would do is make the move with the understanding that it might only last for a year. If freelancing starts to go well, and you think you can earn enough to make a go of it, present yourself to whichever authority grants residence permits and ask for permission to change/extend your visa, then get yourself set up with the tax authorities. 

Best case, it works. Worst case, you tried, and you had a fun year in Spain.


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## lashend

Thank you again Nononymous ... I guess I'll go at it with my head down, working hard, and crossed fingers that things work out well financially this first year. Not the pressure-slim year I'd hoped for, but it is what Is, and I guess I'll go with it. 

I really appreciate your perspective (and kind replies) here - thank you very much again.


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## Nononymous

Well maybe not a no-pressure year. Really two things need to happen. One, you need to find enough freelance work to support yourself, or it's not viable no matter what sort of visa you have. Two, if you have the work, you need to persuade the authorities to let you stay on (as a taxpayer of course). That's probably not impossible. If it's anything like Germany, speaking the language, having an understanding of how things work, and being polite, charming and decently dressed when dealing with officialdom will definitely work in your favour.


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## xabiaxica

lashend said:


> Shoot. So it looks like I really am in a tricky position: I saved up enough money to meet the requirements for the non-lucrative visa via savings: I’m just switching this year (beginning June 2017) from full-time employment-for-an-institution to being a freelancer, and I can’t, at this point, prove that I make enough on a *monthly* basis to meet the minimum that way). Obviously my idea is: I save up enough so that I can live for two years without batting an eyebrow in the case that “everything fails.” And then the idea of course is to not fail, so that I am, at the end of the year, generating a regular monthly income. But I’m not at that point now, and my non-lucrative visa is on the basis of savings.
> 
> It is starting more and more to look like I’m in a tricky position.
> 
> You guys sound pretty experienced with all of this … what would you do in the middle of the “trickiness”? Aside from “just give up”
> 
> Thank you!!


If you've applied for the visa on the back of savings, not remote income, then your visa will state 'no work'. As has been mentioned, it's where you are when you work, not where the work is, that counts.

You wouldn't be the first to ignore that - but if caught, there's a real possibility of deportation & ban from re-entry.


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## DanielBrooks

Was any conclusion to this thread ever reached? 

My questions are simple. I plan to apply for a non-lucrative visa and earn passive income in Spain from renting out vacation property, allowed with this visa. I will also have other passive income in the US from interest and dividend earnings and social security payments. 

As I understand it, I would need to be in Spain 6 months of every year to qualify for renewing the non-lucrative visa. Being in Spain that number of days would make me a tax resident and I would need to report my worldwide income to the Spanish tax authorities. Seems logical to me. I'm wondering whether the income from renting out vacation property would be taxable and at what rates.

I am also reading that it is allowed to be compensated for such passive work with the non-lucrative visa as teaching, something I plan on doing. I also understand it is allowed to own a business with this visa (less of interest).

It looks like I need to refer to a tax specialist....


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## Bevdeforges

There isn't really a "conclusion" to be reached. 

The main points to take away from this discussion however are as follows:

1. As a "US person" (i.e. citizen or permanent resident) you are ALWAYS considered tax resident in the US, no matter where in the world you are located. There are a number of benefits and devices you can take advantage of to reduce or avoid double taxation of various elements of your worldwide income - but you still have to report your worldwide income to the IRS each year, and indicate how you choose to treat it within the bounds of US tax law.

2. Your tax "residence" or obligation to any other jurisdiction is a completely and utterly separate matter, subject to the laws of the place where you reside and/or the source of your income.

3. Most places (countries) that consider you tax resident will expect you to declare your worldwide income for income tax purposes. Even this number, however, will not be the same from one country to the next and each country seems to have its own (often unique) way to allow for income taxes you may have paid or be subject to elsewhere.

Cheers,
Bev


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## DanielBrooks

Bev, thanks. But I think you are answering a question that I wasn't trying to ask. That said, I'm well aware of US tax reporting requirements, having lived outside the US for many years. In fact, I'm working on my US taxes as we speak. 

My question is in regards to Spain. Specifically, if I have a non-lucrative Spanish visa, do I become a tax resident after being physically present in Spain for six months out of every year, do I need to report my US income in Spain and is my US income taxable - in Spain. 

There is a US/Spanish tax treaty and I also need to find out how it affects my tax payment, since I might be required to file taxes in both Spain and the US. 

As for a conclusion, I firmly believe one definitely needs to be reached. I plan on moving to Spain after (not before) I understand what my tax reporting obligations end up being. Having been an expat for 30 years, I've learned to look hard before taking the leap of moving to a new country.


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## Bevdeforges

> My question is in regards to Spain. Specifically, if I have a non-lucrative Spanish visa, do I become a tax resident after being physically present in Spain for six months out of every year, do I need to report my US income in Spain and is my US income taxable - in Spain.


And the answer to that is basically, "yes."

Once you become tax resident in Spain (according to their tax rules) you need to report your US income in Spain (along with any and all Spanish income). You need to refer to the US-Spain tax treaty for the specifics, but usually, your worldwide income (i.e. both US and Spanish sourced) is considered taxable in both countries. The tax treaty should indicate what the process is for reducing/eliminating any double taxation.

For the US the usual method is the Foreign Tax Credit (i.e. form 1116) - where you get a credit for the actual amount of taxes you pay to the "other" country (i.e. Spain). I'm not familiar with the Spanish tax system, but the usual approach is to report the income and then somehow identify it as US sourced so that the tax treaty provisions can be applied.
Cheers,
Bev


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## jmiller

DanielBrooks said:


> Bev, thanks. But I think you are answering a question that I wasn't trying to ask. That said, I'm well aware of US tax reporting requirements, having lived outside the US for many years. In fact, I'm working on my US taxes as we speak.
> 
> My question is in regards to Spain. Specifically, if I have a non-lucrative Spanish visa, do I become a tax resident after being physically present in Spain for six months out of every year, do I need to report my US income in Spain and is my US income taxable - in Spain.
> 
> There is a US/Spanish tax treaty and I also need to find out how it affects my tax payment, since I might be required to file taxes in both Spain and the US.
> 
> As for a conclusion, I firmly believe one definitely needs to be reached. I plan on moving to Spain after (not before) I understand what my tax reporting obligations end up being. Having been an expat for 30 years, I've learned to look hard before taking the leap of moving to a new country.


Maybe I can help here with a couple of points:

1, As a general rule as a UK, Australian or US citizen you do not automatically become a Spanish tax resident after 183 days in a year as long as you can prove your area of vital interests is not in Spain. That means not working for clients with offices in Spain, and no physical job in Spain and a permeant home outside of Spain. If you can demonstrate your area of vital interests is not in Spain by these means you are good to not file Spanish taxes period. 

2, There is no expectation of you filing taxes on a non lucrative visa as its nature is temporary anyway. Its intent is to allow self sufficient people to live in Spain a few years and not leach benefits of the system. No one is going to come hounding you and in the million to one case they did if you file US taxes with a US address you will have already declared you are a US resident for taxes purposes so the case would be closed as you would have defacto proof as per the tax treaty which only requires a tax certificate in any tiebreaker case.

I would recommend you speak to a good lawyer to discuss your specifics but hope the about helps.


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## Bevdeforges

One caveat to this:



> in the million to one case they did if you file US taxes with a US address you will have already declared you are a US resident for taxes purposes so the case would be closed as you would have defacto proof as per the tax treaty which only requires a tax certificate in any tiebreaker case.


A US citizen remains "tax resident" in the US even if they are also tax resident elsewhere in the world. It's one of those little peculiarities of US tax law due to "citizenship based taxation." Simply having filed US taxes does not remove you from whatever tax residence you may or may not have in your country of residence. 

It might be a good idea to find out the Spanish law on "tax residence" and see if there is anything you can do to avoid meeting those conditions. While I don't know about the Spanish requirements, in many European countries, the key thing is where your "centers of interest" are - however defined.
Cheers,
Bev


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## Tortuga Torta

jmiller said:


> Maybe I can help here with a couple of points:
> 
> 1, As a general rule as a UK, Australian or US citizen you do not automatically become a Spanish tax resident after 183 days in a year as long as you can prove your area of vital interests is not in Spain. That means not working for clients with offices in Spain, and no physical job in Spain and a permeant home outside of Spain. If you can demonstrate your area of vital interests is not in Spain by these means you are good to not file Spanish taxes period.


That's not what Blevins Franks says, and their whole raison d'etre is to sort out expat-to-Spain tax issues:



> You are resident in Spain for tax purposes if *any* of the following apply:
> 
> 1. *You spend more than 183 days in Spain in one calendar year. *This is whether or not you take out a formal residence permit. These days do not have to be consecutive. Temporary absences from Spain are ignored for the purpose of the 183-day rule unless it can be proved that you are habitually resident in another country for more than 183 days a calendar year,
> 
> 2. Your “centre of economic interests” is in Spain, i.e. the base for your economic or professional activities is in Spain.
> 
> 3. Your “centre of vital interests” is in Spain – i.e. your spouse lives here (and you are not legally separated), and/or your dependent minor children do. In this case you are presumed Spanish resident, unless proven otherwise, even though you may spend less than 183 days per year in Spain.


So this is saying that you could spend merely 20 days in Spain in a year but if your centre of economic or vital interests is in Spain, you are considered a tax resident. But if you spend >183 days, whether you have interests there or not doesn't matter--you're a tax resident.


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