Filing US expatriate tax returns for American expats Spain

By Expat News

American expats in Spain are drawn to this beautiful country for its weather, nature and a lot of history. Expats reside in different parts of Spain with the highest concentration in big cities like Madrid and Barcelona. Another thing to mention is that  expats are subject to Spanish income taxes. Moreover, the complexity of expat tax filing is on the rise. For example, American expats Spain should know What is FBAR and how they can deduct Foreign Housing Expenses. Proper expatriate tax preparation and planning is required to file correctly US expatriate tax returns and Spanish personal income tax return (I.R.P.F, Impuesto sobre la Renta de las Personas Fisicas) or Spanish Non-Resident Tax return (Impuesto sobre la Renta de No Residentes).

We get multiple questions from expats Spain. What are foreign income tax rates in Spain? Are expats Spain required to report their worldwide income? Do you provide US expatriate tax services for American expats in Spain? This article is intended to cover the most popular questions.

Expatriate Tax Rules and Returns for Expats Spain

First thing to remember that the worldwide income of US citizens and green card holders is subject to US income taxes whether they live in Madrid or New York. However, the application of IRS several exclusions as well as foreign tax credit will help avoid double taxation.

  • Foreign earned income exclusion. American expats Spain can exclude up to $101,300 for 2016 on their expatriate tax returns if they earned foreign income and met one of the tests.
  • Foreign housing exclusion. Additionally, American expats Spain can deduct certain foreign housing expenses like rent, utilities etc if they are eligible to claim foreign income exclusion.
  • Foreign tax credit. American expats Spain can also take foreign tax credit for foreign income taxes paid in Spain.

American expats Spain may be required to submit FBARs if they have foreign financial accounts.

Tax system in Spain – FAQ

Are American expats residing in Spain subject to the worldwide taxation by Spain?

American expats Spain are taxed on their worldwide income if they are considered Spanish residents. Non-residents are subject to personal income tax only on income from Spanish sources. It is essential to understand a difference between a resident and non-resident definition.

Who is considered a tax resident in Spain?

As a general rule, American expat in Spain is considered a tax resident if s/he has spent at least 183 days in Spain during the tax year. Spain has a special tax regime for inbound expats. Expatriates must meet several requirements to be taxed as a non-resident. Further guidance from an expatriate tax practitioner is required.

What is the tax year in Spain?

Spain has a calendar tax year.

What are foreign income tax rates in Spain?

Personal income tax rate for residents is based on two progressive scales: general and autonomous community. Final tax rate is calculated by adding both rates. Each autonomous community has its own rates. General rates for 2012-2013 are from 12.75% to 30.5%.

The income tax rates for non-residents in 2013 are 24.75% on the general category income and 21% on capital gains and investment income.

Which income is taxable in Spain?

Generally, all types of remuneration and benefits are subject to income tax: salary, benefits-in-kind, school tuition reimbursement, housing allowances paid in cash etc. Some benefits might be excluded like medical insurance premiums, meal vouchers, nursery reimbursement etc.

Can an American expat in Spain file an expatriate tax return on overseas taxes with a spouse?

Spouses have a choice to file joint or separate returns. If an individual files a joint return, s/he is taxed as a part of family unit that usually consists of 2 spouses and children under 18yrs old. If one spouse files a separate return, another spouse has to file a separate return too. The Spanish system has the similarities with the US tax system.

Is it a requirement to file a Spanish tax return every year?

American expats in Spain have to file a tax return and make a payment from 1 May to 30 June of each year. Specific filing deadlines apply to non-residents. Penalties may be imposed if a tax return is not filed on time.

Does Spain have a tax treaty and social security agreement with the USA?

There is a tax treaty and social security agreement between the USA and Spain. American expats Spain must consult an expatriate tax professional to minimize the effect of double taxation and overseas taxes as well as to review social security payments.


This is an overview of major expatriate tax issues that American expats must consider before moving to Spain, choosing the filing status, Spanish tax returns and US expat tax returns.

American expats Spain who need additional help with US expatriate tax preparation and different treaty positions, please seek help of an expatriate tax CPA that specializes in international tax issues. International tax experts at Artio Partners are here to assist you with various expat tax questions.