# Taxes in Spain



## brentinco (Nov 30, 2017)

Hello there,

My wife and I currently live in Colorado and will be moving to Spain (Rota area) in 2019. We will be retired and just drawing Navy retirement income, SSN and disability. Does anybody know if we will be taxed in Spain at the US tax bracket or at the Spanish tax bracket? My wife is a dual citizen if that makes a difference. We were told the Spanish/US agreement says we will be taxed at the US level, but wanted to ask if any of you are in this same situation. Any information will be much appreciated. Thank you!


----------



## xabiaxica (Jun 23, 2009)

:welcome:

Citizenship & nationality makes no difference.

Spain taxes all worldwide income the same for everyone wo is resident in Spain. 

As far as I understand it, the tax agreement means that you don't pay the same tax twice - but if thresholds are lower in Spain, you would pay the difference to Spain. 

The full convention is here though https://www.irs.gov/pub/irs-trty/spain.pdf


----------



## DonMarco (Nov 20, 2016)

xabiachica said:


> :welcome:
> 
> - but if thresholds are lower in Spain, you would pay the difference to Spain.
> 
> f[/URL]


Don't understand the above - So if the US threshold is higher, the Spanish threshold has no meaning.


----------



## xabiaxica (Jun 23, 2009)

DonMarco said:


> Don't understand the above - So if the US threshold is higher, the Spanish threshold has no meaning.


What I mean is, if for example you pay tax on income over 20K in the US, but the threshold is lower in Spain at say 15K, then you'd owe tax to Spain.


*I don't know what the thresholds are off the top of my head - those figures are just an example


----------



## DonMarco (Nov 20, 2016)

xabiachica said:


> What I mean is, if for example you pay tax on income over 20K in the US, but the threshold is lower in Spain at say 15K, then you'd owe tax to Spain.
> 
> 
> *I don't know what the thresholds are off the top of my head - those figures are just an example


I still don't get it because I don't see the relevance of a tax threshold from another country if you're resident in Spain and therefor presumably pay tax according to Spanish tax laws but what really matters is that brentinco understands.


----------



## snikpoh (Nov 19, 2007)

DonMarco said:


> I still don't get it because I don't see the relevance of a tax threshold from another country if you're resident in Spain and therefor presumably pay tax according to Spanish tax laws but what really matters is that brentinco understands.


Let me give this a go;

For the sake of argument, let's say you pay 10,000€ tax in USA (ignoring currency conversion)

Due to the lower allowances in Spain, you might have to pay 15,000€ on the (same) declared income.

So, because of the double tax treaty, you declare your income in Spain (as you are resident here). You should pay 15000€ but can offset the 10000€ already paid on that income to USA. This leaves a balance owing to Spain of 5000€


If it were the other way round. (15k paid in USA and 10k required in Spain) there is no extra to pay but you also do NOT get a rebate from Spain.


----------



## DonMarco (Nov 20, 2016)

Thanks I get it now. I went wrong thinking that a double taxation treaty assures you only pay tax in the country of residence. Thought that was the case with me as Swiss resident I only pay tax on my world wide income in Switzerland even though I receive income from the UK and Germany. Could be that I'm below the respective thresholds but so far so good.


----------



## RoyalBlue (Apr 10, 2016)

I'm sure someone may find this wrong and correct me, but this is what I did
1) I pay my US taxes
2) I fill out the Spanish tax form, and state the amount of tax I paid in the US.
3) The NET amount still due to Spain is the difference of (Spain gross tax - US tax paid).

The overall effect of this is that my total tax bill is the Gross amount of Spanish tax. Spain tax, having a higher marginal tax rate, etc. ends up being higher than US taxes. But at least you don't end up paying a total bill which is more than if you were ONLY paying Spain tax, not Spain + US.

Regards


----------



## Juan C (Sep 4, 2017)

/SNIP/

Brent: I assume you have checked the Double Treaty Agreement between USA and Spain

The DTA between Spain and UK stipulates that Crown Pensions, those paid by either Government to former employees, so including military, can only be taxed the country which pays the pension.

As far as I know the DTA between Spain and other countries vary considerably.


----------



## Elyles (Aug 30, 2012)

brentinco said:


> Hello there,
> 
> 
> 
> My wife and I currently live in Colorado and will be moving to Spain (Rota area) in 2019. We will be retired and just drawing Navy retirement income, SSN and disability. Does anybody know if we will be taxed in Spain at the US tax bracket or at the Spanish tax bracket? My wife is a dual citizen if that makes a difference. We were told the Spanish/US agreement says we will be taxed at the US level, but wanted to ask if any of you are in this same situation. Any information will be much appreciated. Thank you!




Hey guys, the US/Spain tax treaty is pretty simple but to participate one must apply for IRS form 8802 on an annual basis. Keep in mind that the US government is very slow and plan on a month beyond approval to receive it. The office is is Philly and only deals with this form. To call them is easier than calling the Washington IRS office. 


Sent from my iPad using Tapatalk


----------



## Ifn (Jan 29, 2017)

Elyles said:


> Hey guys, the US/Spain tax treaty is pretty simple but to participate one must apply for IRS form 8802 on an annual basis. Keep in mind that the US government is very slow and plan on a month beyond approval to receive it. The office is is Philly and only deals with this form. To call them is easier than calling the Washington IRS office.
> 
> 
> Sent from my iPad using Tapatalk


Elyles, you are a fount of knowledge . Here is a link about this form with a link on that page to download the form and instructions
https://www.irs.gov/individuals/international-taxpayers/form-8802-application-for-united-states-residency-certification-additional-certification-requests
But you mentioned something about approval. Is there an additional step or can the simply be downloaded?


----------



## Ifn (Jan 29, 2017)

Never mind, I see where you have to apply for approval


----------



## Elyles (Aug 30, 2012)

Ifn said:


> Never mind, I see where you have to apply for approval




The form itself can be downloaded but there is an annual fee of around 80$


Sent from my iPad using Tapatalk


----------

