SPANISH TAXES for EXPATS | What you MUST KNOW living in SPAIN
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- เผยแพร่เมื่อ 26 มิ.ย. 2024
- Thinking of moving to Spain and want to know how much tax you would have to pay as a Spanish tax resident? In this video we cover what you need to know about Spanish taxes for expats living in Spain. From personal income tax to wealth tax and inheritance tax, Spain taxes are complicated and ever changing. Plus, once you have lived in Spain more than 183 days in a year, you are a tax resident for that entire year. It’s critical to understand the rules and time your move so as not to pay thousands in taxes that you don’t have to.
Tax talk can be dry and confusing but we’ve done our best to keep it simple and easy to understand. Let us know what you think, if you’re planning on making a move to Spain and if there is anything else we should know.
For collaborations email seekingparadisebugs@gmail.com
📑CHAPTER LIST:
00:00 Intro
01:39 Types of Spanish Residency Visas
02:38 Spanish Tax Resident
04:12 Double Taxation Treaties
04:52 Types of Taxes in Spain
05:08 Personal Income Taxes in Spain
05:44 2024 General Taxable Income Rates in Spain
07:52 2024 Savings Taxable Income Rates in Spain
08:21 What Tax Allowances are there in Spain?
09:19 Capital Gains Tax in Spain
11:13 Wealth Tax and National Solidarity Tax in Spain
13:00 Inheritance Tax: Spanish Succession Tax
14:49 Modelo 720 Form - Declaration of Foreign Assets
15:14 Beckham Law Tax Regime
15:48 Final Thoughts
16:40 Outro
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Tax Benefits for Expats in Spain
DISCLOSURE:
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*Also, sometimes we discuss financial topics. We are not financial professionals, please consult a licensed advisor for financial advice.
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Thank you for another helpful video. This stuff is always difficult to find reliable information on and you guys do a great job of making it accessible. (If only Shakira knew about your channel, she could have saved herself a lot of aggravation.)
you crack me up! thank you. Shakira could have saved herself money and her marriage too 😅
Excellent presentation. I crossed Spain off my list long ago.
Clear and concise! Thanks you two!
Our pleasure!
I love these nitty gritty topics and REALLY appreciate your FIRE part 1 and 2 videos. Thanks for doing this. I will always watch and like.
Thanks so much for watching! It's comments like yours that inspire us to keep making videos. 🥰
Great video, detailed and concise! Well done and thank you
thanks so much! 😊
Well done as always! Thanks!
Thanks so much! This one was a little challenging to put together and we couldn`t address everything or even obtain answers to everything but will share more info as we receive it. Hoping this gets a good discussion flowing for everyone to learn from.
Thank you. I have been viewing other similar videos to get a grasp on the tax situation in Spain before considering moving there. Your video was very informational and I learned a few things that I was not aware of previously.
Thank you that is great to hear! Let us know if you have other questions. We may do a follow up video.
Wonderful job explaining this difficult topic, well done! thank you
thank you! it was hard and we're glad it helps ☺️
Super informative
Thank you
thank you! it was a lot of info. Glad to help.
Great information to consider. Thanks guys!
Thanks for watching and look out for our follow up Q&A video with Pro Spain Consulting.
Great Video! Lots to think about!
Thank you!
Really informative, thank you both!
thank you for watching. Glad it helps
Very helpful video!
thank you Alex! 😊
Super informative thanks a lot for sharing
Glad it was helpful!
Awesome video. There's not much info out there. Thank You!!!!!
Thanks! Yes, we have been looking for info and there is very little. The good info we have found is not geared towards US citizens and we have our own challenges. Even the Spanish professionals we have spoken with have differing opinions on how certain investments will be taxed. An issue we have also come across in Portugal.
Great video!
Thanks so much! We appreciate your support!! 😊
Very good video!!
Thank you very much!
Gonna move to Spain soon. I hope they keep the inheritance and wealth tax.
Many foreigners have this thinking:
I want to go to spain, settle there, get benefits from the public services, health, roads, green spaces, security and transport... but i DONT want to pay taxes.
At the end, spaniards will maintain these services, while the foreigners just take vantage from them. That´s completely unfair.
In Spain we don´t have the same problems they have for example in USA, because we make efforth and pay more taxes to maintain the things as they are.
In America many roads are just broken and public transport is a mess, even in places with high taxes like Nyc.
Thank you for sharing your opinion. We understand that some foreigners may think that way but we do not believe most foreigners DON'T want to pay taxes. As a resident of any country, foreigners expect to and legally must pay taxes and as US citizens we have to continue paying taxes to the USA no matter where we live in the world. Therefore, we need to make sure we understand both tax systems so we are not double taxed because we don't think anybody wants to pay taxes on the same money twice. Also, when considering a move to another country, it is wise to know the financial implications in order to make the best decision about moving.
@@SeekingParadiseBugs Totally agree and it´s a fair point.
As far as i know, only two countries in the world force the citizens to pay taxes independently of their residence and sadly USA is one of them, so i understand your poipnt completely. I also went through the same situation because i lived abroad as well.
I think i remember from another video that there is a simplified double-taxation treaty between both countries.
The amount of taxes you pay in Spain should be substracted from the amount you pay in the states.
Regarding the taxes in Spain, they will tell you that you can pay till 45-50% in what we call IRPF but that´s not completely true.
if you are a employee, the taxation is done by income sections, comparing your yearly gross income.
From that income, the first 20.000 euro are exempt. For the next section from 20.000 to 35.000 you pay 30%... and so on.
Only the section from 60.000 euros onwards pay 45%.
Aside IRPF, there could be some other contributions but they are not that much, like unemployment benefits, retirement etc...
If you are self-employed the thing gets harder and for me this is the worst part of spanish taxes. We have been claiming for a change in small companies/self employment tax system, making the things easier for entrepreneurs. The country is still on it since decades.
This is general in Spain, regardless the region you live. In USA you have different taxes depending on the state, county, region, city, etc... So it´s another totally different paradigm.
Thank you for sharing this information. Hopefully there will be a good tax reform for self employed/entrepreneurs in Spain soon! It is so important to support small business people, especially nowadays!
Super fun and informative - thanks for putting this together! Two common questions that were not covered (unless I missed it) are how Roth IRA withdraws are treated for personal income taxes and if 401k and IRA balances are considered for the wealth tax.
Thanks and glad you enjoyed it! Roth IRA withdrawals are taxed under income taxes and considered in the wealth tax. 401k and IRAs being considered under the wealth tax is a little trickier to get an answer about. Supposedly pensions in Spain are not considered in the wealth tax but there seems to be differing opinions about whether US 401ks and IRAs are considered to be pensions under the Spanish definition. Therefore, you may receive different answers from Spanish accountants and Spanish tax authority administrators. It's a question you will want to ask the Spanish accountant you consider working with in order to know their position up front.
Thinking it would be best to reside in Spain while living solely under my large government pension for the several years before social security kicks in at 67. Live in one of the areas with no wealth tax and not buy property so avoid those taxes.
Then after the income increases again after my spouse starts SS, we just move away. Giving us several years of living in Spain and exploring Europe.
Or…just do the Schengen shuffle and use the 4 countries with agreements for visa extensions to stay year round without becoming tax residents of any of those countries.
Lots to plan in the next 12 months before early retirement.
@@frontiermusings Congrats on your upcoming early retirement! There is definitely lots of planning for a grand adventure and 12 months will fly by quickly!!
Hi Dianne and Guillermo, how are you doing? Did you move to Spain? We got a small place in Santiago de Ribera in Murcia Province. Love it !
Hola! We have not moved to Spain but are considering it or maybe buying a winter place there. So glad to hear you are loving it in Spain!! How long have you been there?
I love your videos! They are all professionally done with great music like documentary films. Love Spain 🇪🇸 but its tax system is a killer. Americans already paid taxes on Roth 401k and Roth IRA But will be taxed again in Spain! LOCURA! 😢 Could you do a follow up video on the Spanish tax for example how to be a resident in Spain but a NON TAX RESIDENT in Spain. For example for EU citizens living in Spain less than 6 months not a tax resident therefore no ta burden to Spain. And enjoy the rest time in France / Mexico. Love México ❤ hablo español. Life is so easy in Mexico no tax burden with total freedom. Could you have your lawyer to clarify this in your follow up video - if a naturalized Mexican citizen would qualify for the 2 year fast track Spanish citizenship application. There are different opinions on this. The law is not clear. I am sure many people will be interested in this topic. Cheers 🎉
Thank you so much for the kind words! 😍 Great point about the 2 year fast track Spanish citizenship, we will definitely follow up on this. If you reside in Spain more than 183 days you will be a tax resident so you could definitely spend time in other countries and keep your time in Spain limited. Many Non-EU citizens that are second home owners in Spain do the Schengen shuffle to avoid obtaining residency and tax residency in Spain.
Very useful information. Finally, someone got down to the meat and potatoes. First time I've heard that Fire, Police, Civil Servants and Military pensions are exempt from taxation in Spain. That will make a big difference. Thank you!
Thank you so much! Happy to hear this is helpful and yes a gamechanger for public servant and military pensions! Let us know if there is anything you would like to know or clarify. We are planning a Q&A with Pro Spain Consulting to cover more questions we've received.
Can you please confirm if California teachers pension is exempt?
@@lindylee1139we will add to our list of questions for our Q&A with Pro Spain Condulting. Keep an eye out for that follow up video or book a 20 minute free consult with them. 😊
It's a lie.
it would be good to know what you refer to as a lie? 🤷🏽
@cecilbatts8835, the average SS check equates to $22,344 annual income. Deducting the individual allowance for those under 65 leaves $16,794. Tax burden would be $3408, which is only 15.25%, not 30%. There is alot more to consider when it comes to cost of living than taxes anyway.
Love your videos... still waiting for your Italy review.. - BTW, I lived in Spain (Madrid and Sevilla) for 8 years in the 1980's. I haven't been back in 25 years!! 😫😢😭. I Love Spain. I miss all my friends. I miss the life. I know Spain has changed a lot since I left but the small towns like Pilas, and Almonte, the people don't change much. They still maintain an authentic lifestyle and traditions. Who knows if I will be able to return one day. I do hope so.
Thanks so much! Our first video on Italy will be out in the next couple of months and we will be doing more. 😊 Spain is amazing and we hope your dream to return comes true!
Hi guys….great and informative video…..I have just heard a rumour that the Spanish Golden Visa is being discontinued…..
we're not aware of that. If we hear a confirmation will update here in the comments. So many changes, we wouldn't be surprised
Great video!! Thank you very much.
I have sent a request for a free tax consultation. Hopefully that works out!
Thanks for watching and please let us know how the complimentary consultation works out!
@@SeekingParadiseBugs will do.
Great videos. Could you do an update for 2024? Thanks
we sure will. We are preparing a follow up Q&A video with our tax team and will post as soon as we can 👍🏽
Love your videos. The music back ground is too loud and distracting. Just a constructive feedback.
thank you for the feedback. We will make sure it's not too loud next time. We continue to improve with every comment 🙏🏽
Spain is totally the best..but going form low tax bracket in US to very high tax bracket in Spain takes a big bite out of the advantage of low cost of living in Spain. Its SOOOO much better than Mexico....but for people who WFH, its hard to beat Mexico where you exclude income completely from US fed tax and Mexico doesn't come after you for Mexico federal tax.
Correct. Even with a tax treaty between Spain and the US, Spain taxes make it a no go for me.
We really liked living in Mexico and agree the tax situation is easier for US citizens living there. Spain has definitely captured our hearts though and the cost of living is low enough that some people may live a better quality of life than in the US on the same income. It really depends on the amount and source of income and the region you choose to live in Spain. We are planning a follow up video with Pro Spain Consulting to clarify some questions we have received and hope it will be helpful.
@@SeekingParadiseBugs You guys really do a fantastic job. Kudos.
You do know what "expat" means, don't you ? It means someone temporarily in the country, such as a contactor or a student. A permanent resident is an immigrant.
We know this has been a controversial term and we actually consider ourselves expats right now as we live in different countries as temporary residents. We will consider ourselves immigrants when we decide on our forever home and obtain permanent residency in that country.
Great video guys.....Spain, you will not sniff my tax money. 😂😂😂. But i will visit every now and then.
Thanks so much! It's definitely a great place to visit!!
Thanks for the info. Great stuff. Just want to clarify one thing. Spanish taxes on pensions, social security and 403b withdrawals. Did you say Spain doesn't tax pensions for government workers? What about social security and 403b withdrawals? My wife and I are both government workers and each of us has a pension, social security and 403b. I'm federal and my wife is state. Thanks again for the video. (BTW a 403b is what a 401k is called for government workers)
Thanks for watching and the great question! It is our understanding that pensions for retired government employees like teachers, police, civil servants, etc are exempt from income tax in Spain under the double tax treaty. We are not sure about the 403b. We believe social security is taxed regardless if you were a government employee or not. Additionally, it is our understanding that although public pensions are not taxable, they are still considered when determining your tax rate. Therefore, it uses up your allowances and lower tax rates and pushes your other income into a higher tax rate.
Thank you. This is very helpful. Have you also found a tax firm in the United States that knows how to submit the foreign tax credit and rules pertaining the credit to avoid paying taxes to both the Spanish and US governments? Thanks!
Thanks for watching! We have a new US accountant we are working with this year that specializes in helping US expats. If the entire process goes smoothly, we would be happy to recommend them.
@@SeekingParadiseBugs I got two estimates of what my income taxes for Spain would be based on income that I receive from Dividends, IRA, and Social Security from an accountant in Madrid and Barcelona. The taxes to Spain would be 30,000 Euros! So, I've been trying to find a US accountant that knows if the 30,000 Euros are a 1 to 1 credit against my US taxes. If so, then I would effectively pay all my taxes to Spain. If not, then I need to find out what additional taxes I may need to pay to the IRS. Although the cost of living in Spain is lower than the US Any double taxation ( I forgot to mention state taxes too) can price anybody out of immigrating to almost any country in Europe.
Thank you, great video. So it is now, 2024. Is the National Solidarity Tax no longer applicable?
We have not heard yet. We will pin a comment to the video with updates as we receive them.
Two things are certain in our life death and taxes.
Absolutely so live everyday like it's your last and optimize your taxes to pay the least! 😊
I'm a bit confused on the General Taxable Income section @5:37. Are the 401k and IRA withdrawals meant to be traditional or Roth? It's an important distinction since Roth contributions are post-tax. Would the taxation be different on Roth accounts such as only on capital gains?
The 401k and IRAs are meant to be traditional. We will try to get clarification on whether ROTH IRA distributions are taxed as general income or since they are not considered pensions with a recognized tax benefit are they only taxed on capital gains under savings income.
My understanding is that a Roth does not fit into a Spain bucket like a govt pension does. It gets taxed like a private pension, soc sec, or a 401k. Consult a tax advisor to be certain.
@@kevinspriggs7178 The strategy with Roth, if your are over 59 1/2, is to withdraw all of it before becoming a ES tax resident. Then the funds are now accessible tax free in the USA and ES. The future income and cap gains will be taxable though.
Hello, any idea how to get an extension on the declaration de renta ? I am out the country and can’t fill out my tax forms due to my bank account not being linked to my NIE
oh I'm sorry, we don't know. Maybe you wanna reach out to Pro Spain Consulting in Spain to find out. I'm sure they will be able to direct you to the proper place to file your extension
If I have my home in spain in a USA revocable trust upon my passing will the home to my beneficiaries be exempt of Spanish taxes like is the case in the USA ? Thanks
We will add to our list of questions for the Q&A video.
At 7:42 in the video you say that it does not take into account any specific regional taxes. It's my understanding that the regional taxes are almost as high as the national taxes. Are these cumulative? In your example you showed that a 50K euro income would pay 14,201 euro tax (without deductions and allowances), but would it also not be almost as much to pay to Andalusia regional tax? If so this is a total tax rate over 50%
Thank you for the question and sorry if we weren't clear. Yes, the regional taxes are almost the same as the national tax. For simplification, the tax table we used in our example is double the national tax rate. Let us know if you have other questions or would like further clarification. Thanks for watching! ☺️
@@SeekingParadiseBugs So the tax table used in the video might be a good approximation of the combined national and regional taxes, a simple estimate of what the total tax bill might be?
Yes, exactly, we are showing a simple example of the total tax.
Their tax brackets are insane. If you already pay taxes in your home country, a person should be exempt from taxes in the country they are going to live in unless you are going to work and generate income there. After all, retirees are just going to spend money and pay health insurance there. I was thinking of retiring there but with that tax burden it’s crazy.
We understand the tax obligation seems overwhelming. The quality of life Spain offers plays an important role for us and individual tax planning can help reduce the amount you owe.
I would agree, but as a usa citizen the usa tax will apply regardless of wherever you live. You won’t pay double, as per the treaty. You will pay the difference after subtracting the lesser amounts, is my impression. A tax specialist needs to be good for both tax responsibilities it seems.
@@yanassi Yes, believe you can claim the taxes from Spain in your U.S. income tax return, but the percentage in Spain is at least double what we pay in the U.S. it increases to about 42 percent as you move up in income. Probably the best option for a retiree, is to live in Spain under the 183 days a year in avoid their taxes all together. I’m thinking of dividing my time between Europe, USA and South America.
It really depends on the amount of income, source of income and region you live in Spain. We are still learning and sharing as there is not a lot of helpful information out there for US retirees. Of course, consulting with a Spanish tax advisor is always best for each person's individual circumstances. We plan to do a Q&A session with Pro Spain Consulting that we will share so let us know any specific questions you may have!
@richardortora9530 And then what do you contribute to the country of residence? As a Spaniard, I don't really care that you pay tax in the US, you live in Spain, you contribute in Spain, as I do , because you are getting benefit from the same services as me like security, roads maintenance, green spaces, etc, etc... I don't have to support you with my taxes... if you don't want to pay US tax, don't work in the US...as simple like that, this is not theme park!
If you sell a property in the US in 2024, why would you need to delay tax residency in Spain until 2026 to avoid the cap gains on the sale? It would be something reported on your 2024 return.
We do not indicate you would need to delay tax residency until 2026. We are suggesting you may not want to sell a house in the US or any other country in 2024, move to Spain and become a tax resident that year as you would then owe capital gains tax to Spain for the sale of the property. Spain taxes residents on their worldwide assets so you could end up owing capital gains tax to Spain if you become a tax resident the same year that you sell a property in another country. This could be avoided with proper timing of your move.
Capital gains …CAN be exempt if over 65? Or will be…
It's our understanding over 65 is exempt. We plan on a Q&A session with Pro Spain Consulting that we will share in a video to clarify questions people have.
How about a divorce pension already paid tax by my ex partner?
Thanks for asking. We'll add that to our list of follow up questions!
Paid tax already in other country.
Only 6 minutes into the video I learned Social Security income is taxed at 30% in Spain. That skews the cost of living in Spain. Think I'll stay in USA.
Thank you for watching and commenting! ☺️ We don't want to deter people from living in Spain, we want to educate on what to expect. So many other things are lower cost in Spain that some people may live a better quality of life for around the same annual amount or possibly a lower amount. We will be doing a follow up to clarify and answer more questions that we hope will be beneficial for decision making.
Maybe live 3-4 months a year in Spain. You won't get into their tax system if you reduce the amount of time you stay there.
Yes, many people consider living there less than 183 days a year is their best option.
After meeting with a tax consultant my interpretation was that if I am taxed 34% by the US, and my tax in Spain was 24%, I would only pay 10% due to the Treaty between the US and Spain
@@sabrinakoehler6209correct, the tax is probably going to be higher in Spain so you can file a tax extension in the USA and claim a tax credit on your US taxes after completing your Spanish taxes.
Where is time stamp 16:15 ?
it's Mijas Pueblo, a beautiful town near Málaga in the Costa del Sol. We made a full video scouting the town 😊
Thank you
@@SeekingParadiseBugs I checked it out... but the area is along the coast. Mijas pueblo is away from the coast. I checked Mijas costa, but it doesn't appear that could be a possibility either (the A-7 freeway is along the coast in Mijas along the coastline)
Oops! We stand corrected. Looked at the wrong section of video. This is along the Costa del Sol between Fuengirola and Benalmádena.
Well, the freeway is close to the coast in that area. But I did find it... it's Nerja, Spain :) A great balcony there and some caves if you haven't been yet!
I guess I am out!
lol...don't get discouraged! We highly recommend talking with a professional like Pro Spain Consulting to assess your individual situation. Check out our link in the description box for a free 20 minute consult with them.
Not expats, migrants.
We know this has been a controversial term and we actually consider ourselves expats right now as we live in different countries as temporary residents. We will consider ourselves immigrants when we decide on our forever home and obtain permanent residency in that country.
IMMIGRANTS
We know this has been a controversial term and we actually consider ourselves expats right now as we live in different countries as temporary residents. We will consider ourselves immigrants when we decide on our forever home and obtain permanent residency in that country.
Didn't explain Nomad options 😮
We didn't break it down in detail but it's our understanding that if you are a tax resident then the information we've provided applies unless you qualify for spacial tax considerations under the Beckham law. We didn't address taxes for non-residents but would consider doing a video on this in the future, especially since we may be buying a property there before becoming tax residents.