Hi guys really the best and clear tax presentation I have found in youtube, Congrats and keep the good work, found some details that have not found in other presentations, thanks for the excellent work
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.)
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!!
@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.
This is an excellent overview with enough detail that makes it clear how important it is to get professional advice well in advance of making any moves.
Thank you and yes, we believe it is crucial to involve a professional in your planning for an international move. We also agree that this advice should be sought more than a year in advance in order to create a timeline that is best for your scenario.
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.
@@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. 😊
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.
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!
That’s just silly. As a legal extranjero resident of Spain, with a NL visa, I don’t have access to the public health system. I am required to buy my own health insurance. I also don’t object to paying taxes but I do object to paying 30%-35% tax rates on dividend income from money I spent my whole life accruing. Tax rates on withdrawals from retirement accounts should be lower than for regular earned income.
@@gomezaddams4347 You are telling me that retired people from UK living in Spain have access to the public health care and you dont? My wife is also foreigner and in the moment she had the legal residence she had access to the public health care system. I didn´t know that you describe could happen. Do you have a lawyer or Gestor for this? Because it´s very strange.
The vast majority of Spaniards have no problems with the arrival of foreigners, we only ask that they adapt to our culture and social norms and that they contribute to society with their work and/or taxes. We do not want parasites, whether they are people of working age or retirees. People must understand that the possible advantages of living in Spain also entail disadvantages and among these are taxes and our way of life, which may be more or less liked. You cannot only want the good, everything is in the same package.
Very nicely said, thank you! One of the reasons why we think it is so important for people to understand all of the implications before they make a move.
I am spanish and taxes here are hell.... lived in the US and wow, Spain is really high, but for me worth it like you guys said. So glad the golden visa is out though!! we like tourist but not gentrification for we can't rent or buy houses in our own country
Thank you so much for watching and commenting!! Yes, the taxes are painfully high in Spain but alas life is not all about taxes but a balance that makes you happy. 😊
Yes the tax is high here in Spain but there are plenty of ways around it. You would need to live here to understand these ways, and no I cannot broadcast them here. One I can let you in to is that of owning agricultural land. This means you can register as a self sufficient farmer and therefore pay lower rates of both income tax and NIE. Also depending on what you farm ( olives for example ) you will no longer be liable for IVA either. So yes do plenty of research first as it can be very tax heavy living here in Spain. Lots of people move here after seeing how cheap food, drink and property are and then get stung afterwards because they didn't look into their obligations once becoming a resident. And a little hint, if you live here the Spanish don't like you calling youself an expat, you are an immigrant, it is just much more polite and does not project that air of superiority. All the best from Andalusia.
Thank you so much for your insight! We didn't know about the agricultural land and that is a great tip to keep in mind. We agree you must live in a country to understand, learn and appreciate the best ways to prevail there. There is only so much you can learn through research beforehand. We see Spain in our near future and just like we learned more about Portugal living here the last 3 years, I'm sure we'll be learning more about Spain the same way.
@@SeekingParadiseBugs Thanks for the reply. It is lovely living here in Spain but can be expensive. Outside of the finacial issues the other thing to consider is heat. It is presently 38⁰c in the shade here at the moment and I'm 1000m up in the Sierra Nevada mountains. It can be incessant througout the summer. Portugal is considerably cooler. Also everything and anything you do here involves a rediculous amount of paperwork, it is exceedingly complicated and can often take a hugely frustrating amount of time. But the lifestyle in general is very relaxed and there is sunshine all year round mostly. But I would still say try it out before commiting. All the best. Alex
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.
So, my US military pension is tax exempt in Spain. And, when my wife retires from the US government career, her pension would be tax exempt as well. I assume there is no max income limit on these “public” pensions…and I assume that my US Department of Veterans Affairs disability compensation would likewise be exempt from taxes in Spain (in the US it is not taxable as it is compensation, not income). Is this correct? Thanks for the video!
Thanks for watching and that is our understanding! We highly recommend you speak with a professional tax advisor like Pro Spain Consulting before considering a move so there aren't any surprises for your individual case.
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.
@SeekingParadiseBugs just now viewing this video. By chance, were you able to clarify the Roth taxation question? I am a relatively high net wealth individual with almost all of my funds in Roth & HSA accounts which are tax free in the US. So for me this is an extremely important question.
Tax advisors have different interpretations about how ROTH IRAs are taxed which is another good reason to interview Spanish accountants and find one you align with before making the move. I have requested Pro Spain's interpretation and will post here when received.
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?
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.
Income tax is separate from wealth tax. If you do not meet the minimum net worth for wealth tax in the region you live then you do not even have to worry about wealth tax.
Not only is Spain eliminating golden visas but all EU countries have been urged to do so as one of the measures to reduce speculation and the skyrocketing rise in housing prices.
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?
The whole rental income section is incorrect. It’s 19% for EU 24% for everyone else. And if you are not an EU citizen you CANNOT deduct any costs from that income. 10:02
Thank you for your opinion. Please note this video is specifically about taxes you owe as a Spanish tax resident. As a tax resident in Spain or a tax resident of the EEA you are allowed to take deductions for rental expenses. As a Spanish tax resident you are taxed on the net income under the general tax base up to 47% and as an EEA tax resident a flat tax rate of 19% is applied to your rental income. As a non-EEA tax resident a flat tax rate of 24% is applied to your rental income.
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.
Muy pronto vamos a empezar a hacer traducciones en español. Nos toma mucho tiempo completar los videos y pronto tendremos mas tiempo y ayuda para poder expandir. gracias!
Thanks so much for this video. You mentioned military retirement pension being exempt from Spanish income taxes. Does this include U.S military retirement pensions?
Thanks for watching! Yes, this includes US military retirement pensions. If you haven't seen our follow up video, Spanish Taxes Q&A with Pro Spain Consulting it might also be helpful for you.
Thanks for watching and re-watching! 😊 We are working on a follow up Q&A video with Pro Spain Consulting that may offer additional information or clarification. We hope to publish it within the next week.
Amazing, a well prepared and researched video. As a U.S. Military member potentially retiring in Spain or Portugal it is nice to hear that my pension is exempt from Spanish tax.
This year a new bilateral social security treaty was signed between the US and Spain, which improves the older one from 1986. Basically, now you can add the contributions of both countries with many fewer constraints. It is interesting not to overlook this fact when working in different countries. Also, annuities derived from turning in an asset of up to 240k€ have incredible tax reductions in Spain depending on your age (I don't know how it works in the US)
@@SeekingParadiseBugs I mean, you can add up all your contributions to the social security of both countries when you ask for your public pension in the US or Spain, to the extent they don't overlap in time. Still, the treaty has to enter into force (in one year or two I guess). Regarding annuities ("renta vitalicia" in Spanish), you can convert up to 240k into annuities free of taxes on the capital gains when the asset is sold for that purpose AND the subsequent annuities are free of taxes themselves to a high degree (up to 92% if you are 70, 80% if you are between 66-69 years, 76% if you are between 60-65 and so on). On top, the taxes on annuities are treated as saving taxes, much better treatment than income taxes. Nevertheless, depends on how much the insurance company wants to pay you and the modality i.e. if you want to keep the option of recovering what is left of the principal at some point, etc. Some people say other investments are better, even with taxes, to have a better revenue stream coming in. Taxes are complex, but it really pays off to look into them. Regarding selling your home, in Spain, regardless of your age, if you sell your primary home and buy other, there should not be taxes to be paid... but I am not sure if your primary home is abroad (don't copy me on this, real state taxes is something I did not look into much).
Great question! We're not necessarily considering a permanent move immediately but we are considering purchasing a property in Spain and moving there eventually. Also, if we find that the taxes are not too onerous, we may move there sooner rather than later as the humid winters in Portugal are triggering my (Dianne) asthma. We're doing our due diligence now for financial planning regardless of our decision.
Thanks for the informative video. Is the tax residency start date from the date my TIE is effective or will they look at when I entered Spain and count that even before my TIE is effective?
Thanks for watching!! It is our understanding that the tax residency start date is when you enter Spain since you are considered a tax resident if your are physically in Spain more than 183 days.
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.
Thanks for watching! We agree there are many more important things to consider. However understanding the tax situation you will be in before making a move overseas is critical to avoiding surprises in your annual budget.
Solidarity/wealth tax was already renewed for 2024.... Wonder if this will ever go away.. Overall this seems like a very comprehensive review based on all my research...
We wonder also...at least the solidarity tax has a higher net wealth threshold than many of the different regions allowing an individual deduction of €3,700,00 for Andalusia and Madrid before having to pay tax. Murcia has also raised their wealth tax deduction to €3,700,000. Of course, Spanish tax laws are notorious for changing.
@@SeekingParadiseBugs Is that 3.7 mill for anyone. Folks on the NLV visa and others?? That being said, govt's like to be fed and aren't big at pulling back taxes that feed them...
@@andrewe.7907 It may not be the dream place for some people or the permanent dream place. It really is important to understand how your individual circumstances will be affected before making a big move!
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!
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.
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.
Taxes are insane in Spain which is why as a Brit my partner and i decided against living there full time. Not only are the taxes higher than the UK, the Spanish would also be entitled to tax me annually on any interest earned on my UK Cash ISA which i feel is totally wrong. We now just visit Spain for 3 months over winter and it works out much better both financially and time wise, because to be honest, we always look forward to going back to the uk after 12 weeks.
This video is for USA citicens....You Brits have no enough incomes to ask for any visa to live and retire...You can come, get drunk cheap and go back to UK...But be polite, spanish cops are fed up with illegal inmigravts
We are a couple in US, planning to move to Spain permanently in a few years for retirement in Alicante area. I assume that combined we will have around $60k/yr or less in SS and IRA/401k. Could you please give an estimate how much taxes we will pay in Spain? Someone told me it will be 30% or less. Is it true?
Congratulations on your upcoming move to Spain for retirement! Individual taxes differ based on the type of accounts you withdraw from and how much from each person's account. Therefore, we recommend speaking with a professional like Pro Spain Consulting.
let's say if Lucy has accouts both in Japan and the US, how does the Spain government have the ability to know every single details of both country if Lucy doesn't declare all?
Spain may not have the resources to track every tax payer but Lucy is required to declare worldwide assets as a tax resident of Spain and she may face penalties, non-renewal of residency or prison if they find out she did not.
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
Question: if me and my wife are retirees with full age, receiving social security benefits together for usd$29000, based on the US bracket, WE wouldn't have to pay taxes for beeing under the bracket. Since we pay $0 taxes in the US, once we start living in spain as legal residents for over 183 days, according the agreement between the us and spain to avoid double taxation, techically, we shouldn't have to pay taxes in spain,isn't?
It is our understand that as tax residents in Spain, you will be taxed in Spain on your worldwide income including social security. If you owed taxes in the USA then the double taxation treaty between the USA and Spain would ensure that you are not double taxed on the income. There are so many nuances to each person's tax situation that we highly recommend speaking with a professional tax consultant like Pro Spain Consulting before considering a move.
Thank you! Great question and sorry we do not know the answer. We have already had our Q&A with Pro Spain and will be publishing the video soon. They are offering our viewers a complimentary 20 minute consultation if you reach out through our link in the description. 😊
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.
Yes, it includes capital gains from the sale of stock as Spain taxes you on your worldwide income. If you are a US citizen you will also owe tax but due to the double tax treaty you will receive a credit so that you are not double taxed on the same income.
So, if I'm a Spanish Tax Resident with $100K worldwide income and pay about 33% or 33K in euros to Spain and my US tax rate would be only about 20% or 20K , then the Foreign Tax Credit would cancel out the US Tax ( 20K ) and have an additional 13K carry forward to future years ?
It is our understanding that you can carry forward the unused tax credit for 10 years. We would suggest confirming with a US tax accountant though as we have never done this.
Here’s the simplified version: You always pay your U.S. taxes first. If the country you’re living in (like Spain) has higher taxes, you only pay the difference. So, if you pay 20% to the U.S. and Spain wants 40%, you pay Spain the extra 20%. This way, you’re not double-taxed on the same income. Each country gets its fair share.
@@Take5North Understand that. Hopefully, the additional Spain tax ( in this case 20K ) would be offset/compensated by cheaper Cost of Living and better lifestyle ?
@@Take5Northwe actually prefer filing a US tax extension, paying taxes to our country of residence and then filing our US taxes and taking a tax credit for the amount paid to our country of residence. Either way works so it is just determining which option is best for you.
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.
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
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!
I have spouse visa as my wife has a working visa. I'm working for canadian company as a remote contract employee. What will be my tax deductions for each month?
Thanks for watching and commenting! Unfortunately, we do not know the answer to give you based on your individual circumstances. Pro Spain Consulting would be happy to help you and is offering our viewers a complimentary consultation via the link in the description. 😊
If you mean transferring money from a checking account in the USA to a checking account in Spain, there should not be a tax. Tax is based on income and income you receive worldwide is taxed in Spain when you are a tax resident there. Of course there is typically a fee from the institution you use to transfer funds and remember the conversion rate also if going from USD to Euros. We always recommend speaking with a professional such as Pro Spain Consulting before making a move to minimize any taxes. They are offering our viewers a free 20 minutes consultation by clicking on the link in the description.
If you are a tax resident in Spain then rental income received from outside of Spain will be taxed. There are many deductions available to reduce the taxable amount though.
@@noneofyourconcern5448 As a tax resident in Spain, you pay taxes on your worldwide income and must file a form declaring accounts and assets outside of Spain. Our follow up video Spanish Tax Questions Answered for Expats has info about rental income outside of Spain that might be helpful to you. It's a Q&A we did with Pro Spain Consulting.
We believe that is only if it is less than €22,00 and comes from a single employer. If you have multiple sources you may be obligated to file depending on the amounts and sources. This is one of the reasons we always advise people to speak with a tax professional, something we are definitely not. 😊
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.
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 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)
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!
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.
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.
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.
It really depends on the amount and type of income you have to determine how high your tax rate would be there. We really appreciate the quality of life and the services available due to the higher taxes. It is definitely a personal decision based on each person's individual circumstances and so important to understand the tax situation before you make a move.
You want to move here because this is a great country. And yet you don't want to pay what is needed tl make it great. Enjoy the USA and stay there for good.
We actually do not have an issue paying taxes, especially to live in such a great country. We just want to make sure we understand our tax liability and share that with other people considering the move. Better to know before you go than be surprised after you have moved.
Yes, many European countries have higher tax rates than the USA, however, in the USA you pay more for healthcare, education, childcare, property taxes, etc.
@SeekingParadiseBugs Absolutely. I'm not saying it's not worth it. I was just surprised at the rate for the lowest bracket. It gives you more freedom because you aren't locked into a job just to get healthcare.
@@Toaster-v1z We were surprised too and it is one of the reasons why we wanted to share this video. It is so important to understand before you make a big move!
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.
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.
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.
US resident lived in spain 2019-2022, filing US and Spain resident taxes. paid $3000 spain income tax in 2019. in 2023 they are informed they owe another $20,000 in spain taxes on US IRA distribution . in 2024 lives all year US.. can they take the $20,000 spain tax paid as a foreign tax credit on their 2024 1040?
That is a great question for a US tax accountant as we are not professionals. Due to the double taxation agreement, we believe you can adjust your US taxes. You may have to file an amended return or returns for the appropriate year(s) though.
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.
It's really bad in Spain,I do not recommend nor for work or pleasure. Sure the weather is nice but that's about it,nothing good other than weather has come out of this place.
Hi guys really the best and clear tax presentation I have found in youtube, Congrats and keep the good work, found some details that have not found in other presentations, thanks for the excellent work
you are very kind, thank you! we'll continue with more videos 👍🏽
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 😅
Jajajaja so you truly think she didnt know??
Clear and concise! Thanks you two!
Our pleasure!
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!!
Super informative
Thank you
thank you! it was a lot of info. Glad to help.
@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.
This is an excellent overview with enough detail that makes it clear how important it is to get professional advice well in advance of making any moves.
Thank you and yes, we believe it is crucial to involve a professional in your planning for an international move. We also agree that this advice should be sought more than a year in advance in order to create a timeline that is best for your scenario.
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? 🤷🏽
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.
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. 🥰
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!
That’s just silly. As a legal extranjero resident of Spain, with a NL visa, I don’t have access to the public health system. I am required to buy my own health insurance. I also don’t object to paying taxes but I do object to paying 30%-35% tax rates on dividend income from money I spent my whole life accruing. Tax rates on withdrawals from retirement accounts should be lower than for regular earned income.
@@gomezaddams4347 You are telling me that retired people from UK living in Spain have access to the public health care and you dont?
My wife is also foreigner and in the moment she had the legal residence she had access to the public health care system.
I didn´t know that you describe could happen. Do you have a lawyer or Gestor for this? Because it´s very strange.
Another great video!!!Informative, entertaining and funny. Would you ever consider Asia? Thx 🫶
yes! we are starting our Asia tour this new year (Japan) and then Southeast Asia in 2026 😊 We are really curious about living there.
The vast majority of Spaniards have no problems with the arrival of foreigners, we only ask that they adapt to our culture and social norms and that they contribute to society with their work and/or taxes. We do not want parasites, whether they are people of working age or retirees. People must understand that the possible advantages of living in Spain also entail disadvantages and among these are taxes and our way of life, which may be more or less liked. You cannot only want the good, everything is in the same package.
Very nicely said, thank you! One of the reasons why we think it is so important for people to understand all of the implications before they make a move.
I am spanish and taxes here are hell.... lived in the US and wow, Spain is really high, but for me worth it like you guys said. So glad the golden visa is out though!! we like tourist but not gentrification for we can't rent or buy houses in our own country
Thank you so much for watching and commenting!! Yes, the taxes are painfully high in Spain but alas life is not all about taxes but a balance that makes you happy. 😊
Thank you so much for this information it was really helpful
you're welcome. glad to help
Yes the tax is high here in Spain but there are plenty of ways around it. You would need to live here to understand these ways, and no I cannot broadcast them here.
One I can let you in to is that of owning agricultural land.
This means you can register as a self sufficient farmer and therefore pay lower rates of both income tax and NIE. Also depending on what you farm ( olives for example ) you will no longer be liable for IVA either.
So yes do plenty of research first as it can be very tax heavy living here in Spain.
Lots of people move here after seeing how cheap food, drink and property are and then get stung afterwards because they didn't look into their obligations once becoming a resident.
And a little hint, if you live here the Spanish don't like you calling youself an expat, you are an immigrant, it is just much more polite and does not project that air of superiority.
All the best from Andalusia.
Thank you so much for your insight! We didn't know about the agricultural land and that is a great tip to keep in mind. We agree you must live in a country to understand, learn and appreciate the best ways to prevail there. There is only so much you can learn through research beforehand. We see Spain in our near future and just like we learned more about Portugal living here the last 3 years, I'm sure we'll be learning more about Spain the same way.
@@SeekingParadiseBugs Thanks for the reply. It is lovely living here in Spain but can be expensive.
Outside of the finacial issues the other thing to consider is heat.
It is presently 38⁰c in the shade here at the moment and I'm 1000m up in the Sierra Nevada mountains. It can be incessant througout the summer.
Portugal is considerably cooler.
Also everything and anything you do here involves a rediculous amount of paperwork, it is exceedingly complicated and can often take a hugely frustrating amount of time.
But the lifestyle in general is very relaxed and there is sunshine all year round mostly.
But I would still say try it out before commiting.
All the best. Alex
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.
So, my US military pension is tax exempt in Spain. And, when my wife retires from the US government career, her pension would be tax exempt as well. I assume there is no max income limit on these “public” pensions…and I assume that my US Department of Veterans Affairs disability compensation would likewise be exempt from taxes in Spain (in the US it is not taxable as it is compensation, not income). Is this correct?
Thanks for the video!
Thanks for watching and that is our understanding! We highly recommend you speak with a professional tax advisor like Pro Spain Consulting before considering a move so there aren't any surprises for your individual case.
Very useful and very informative. Thanks for putting that all together so nicely !!
Thanks for watching and commenting! It really means a lot to us and keeps us motivated to create more!!
@@SeekingParadiseBugs my pleasure and thank you again for posting such useful info!!! you ROCK !!!
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.
@SeekingParadiseBugs just now viewing this video. By chance, were you able to clarify the Roth taxation question? I am a relatively high net wealth individual with almost all of my funds in Roth & HSA accounts which are tax free in the US. So for me this is an extremely important question.
Tax advisors have different interpretations about how ROTH IRAs are taxed which is another good reason to interview Spanish accountants and find one you align with before making the move. I have requested Pro Spain's interpretation and will post here when received.
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?
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.
Are income taxes (like from US Social Security) taxed differently/separately than wealth tax? Or are they combined and then taxed?
Income tax is separate from wealth tax. If you do not meet the minimum net worth for wealth tax in the region you live then you do not even have to worry about wealth tax.
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
Not only is Spain eliminating golden visas but all EU countries have been urged to do so as one of the measures to reduce speculation and the skyrocketing rise in housing prices.
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.
The whole rental income section is incorrect. It’s 19% for EU 24% for everyone else. And if you are not an EU citizen you CANNOT deduct any costs from that income. 10:02
Thank you for your opinion. Please note this video is specifically about taxes you owe as a Spanish tax resident. As a tax resident in Spain or a tax resident of the EEA you are allowed to take deductions for rental expenses. As a Spanish tax resident you are taxed on the net income under the general tax base up to 47% and as an EEA tax resident a flat tax rate of 19% is applied to your rental income. As a non-EEA tax resident a flat tax rate of 24% is applied to your rental income.
Wonderful job explaining this difficult topic, well done! thank you
thank you! it was hard and we're glad it helps ☺️
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.
Traducir
Muy pronto vamos a empezar a hacer traducciones en español. Nos toma mucho tiempo completar los videos y pronto tendremos mas tiempo y ayuda para poder expandir. gracias!
Thank you for this information, it was very simple to understand and allows me to do some research and look at my options for moving to Spain.
You are very welcome! We are happy you found it useful!! Best of luck on your decision. 😊
Thanks so much for this video. You mentioned military retirement pension being exempt from Spanish income taxes. Does this include U.S military retirement pensions?
Thanks for watching! Yes, this includes US military retirement pensions. If you haven't seen our follow up video, Spanish Taxes Q&A with Pro Spain Consulting it might also be helpful for you.
Thank you for this informative video. My head id still spinning. I will have to revisit it a few times before it sticks 🙂
Thanks for watching and re-watching! 😊 We are working on a follow up Q&A video with Pro Spain Consulting that may offer additional information or clarification. We hope to publish it within the next week.
Amazing, a well prepared and researched video. As a U.S. Military member potentially retiring in Spain or Portugal it is nice to hear that my pension is exempt from Spanish tax.
Thank you and thank you for your service! It is a very nice benefit to have if moving to Spain.
This year a new bilateral social security treaty was signed between the US and Spain, which improves the older one from 1986. Basically, now you can add the contributions of both countries with many fewer constraints. It is interesting not to overlook this fact when working in different countries. Also, annuities derived from turning in an asset of up to 240k€ have incredible tax reductions in Spain depending on your age (I don't know how it works in the US)
Thank you for the update and information!
@@SeekingParadiseBugs I mean, you can add up all your contributions to the social security of both countries when you ask for your public pension in the US or Spain, to the extent they don't overlap in time. Still, the treaty has to enter into force (in one year or two I guess). Regarding annuities ("renta vitalicia" in Spanish), you can convert up to 240k into annuities free of taxes on the capital gains when the asset is sold for that purpose AND the subsequent annuities are free of taxes themselves to a high degree (up to 92% if you are 70, 80% if you are between 66-69 years, 76% if you are between 60-65 and so on). On top, the taxes on annuities are treated as saving taxes, much better treatment than income taxes. Nevertheless, depends on how much the insurance company wants to pay you and the modality i.e. if you want to keep the option of recovering what is left of the principal at some point, etc. Some people say other investments are better, even with taxes, to have a better revenue stream coming in. Taxes are complex, but it really pays off to look into them.
Regarding selling your home, in Spain, regardless of your age, if you sell your primary home and buy other, there should not be taxes to be paid... but I am not sure if your primary home is abroad (don't copy me on this, real state taxes is something I did not look into much).
Great video, detailed and concise! Well done and thank you
thanks so much! 😊
With the 10 year NHR waiver in Portugal, why would you consider moving to Spain until that is terminated?
Great question! We're not necessarily considering a permanent move immediately but we are considering purchasing a property in Spain and moving there eventually. Also, if we find that the taxes are not too onerous, we may move there sooner rather than later as the humid winters in Portugal are triggering my (Dianne) asthma. We're doing our due diligence now for financial planning regardless of our decision.
Thanks for the informative video. Is the tax residency start date from the date my TIE is effective or will they look at when I entered Spain and count that even before my TIE is effective?
Thanks for watching!! It is our understanding that the tax residency start date is when you enter Spain since you are considered a tax resident if your are physically in Spain more than 183 days.
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.
Tax is relatively unimportant compared to income and health care in old age.
Thanks for watching! We agree there are many more important things to consider. However understanding the tax situation you will be in before making a move overseas is critical to avoiding surprises in your annual budget.
Solidarity/wealth tax was already renewed for 2024.... Wonder if this will ever go away..
Overall this seems like a very comprehensive review based on all my research...
We wonder also...at least the solidarity tax has a higher net wealth threshold than many of the different regions allowing an individual deduction of €3,700,00 for Andalusia and Madrid before having to pay tax. Murcia has also raised their wealth tax deduction to €3,700,000. Of course, Spanish tax laws are notorious for changing.
@@SeekingParadiseBugs Is that 3.7 mill for anyone. Folks on the NLV visa and others?? That being said, govt's like to be fed and aren't big at pulling back taxes that feed them...
@@SeekingParadiseBugs The dream is dead...
@@andrewe.7907 Yes that is 3.7 mil for any tax resident in those areas.
@@andrewe.7907 It may not be the dream place for some people or the permanent dream place. It really is important to understand how your individual circumstances will be affected before making a big move!
Would withdrawals of contributions to a Roth IRA account be taxed under Savings Taxable Income or exempt? What about withdrawals of earnings?
It is our understanding that all withdrawals from a ROTH IRA will be taxed. I will try to get verification on this.
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!
Outstanding information. This is the best video I have watched on taxation in Spain. 👍👍👍
Subscribed!
thank you so much! 🙏🏽
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 for sharing. Very informative.
Thanks for watching and commenting!!
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.
Gonna move to Spain soon. I hope they keep the inheritance and wealth tax.
Taxes are insane in Spain which is why as a Brit my partner and i decided against living there full time. Not only are the taxes higher than the UK, the Spanish would also be entitled to tax me annually on any interest earned on my UK Cash ISA which i feel is totally wrong. We now just visit Spain for 3 months over winter and it works out much better both financially and time wise, because to be honest, we always look forward to going back to the uk after 12 weeks.
Happy to hear you've found what works best for you! And you get to enjoy the best of both countries!! 😍
Income tax on dividends is less than UK if structured correctly 👍
This video is for USA citicens....You Brits have no enough incomes to ask for any visa to live and retire...You can come, get drunk cheap and go back to UK...But be polite, spanish cops are fed up with illegal inmigravts
It's very nice not to pay and have the right to free healthcare
Great Video! Lots to think about!
Thank you!
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 👍🏽
We are a couple in US, planning to move to Spain permanently in a few years for retirement in Alicante area. I assume that combined we will have around $60k/yr or less in SS and IRA/401k. Could you please give an estimate how much taxes we will pay in Spain? Someone told me it will be 30% or less. Is it true?
Congratulations on your upcoming move to Spain for retirement! Individual taxes differ based on the type of accounts you withdraw from and how much from each person's account. Therefore, we recommend speaking with a professional like Pro Spain Consulting.
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 🙏🏽
Excellent presentation. I crossed Spain off my list long ago.
Thanks!! Have you decided on another place?
let's say if Lucy has accouts both in Japan and the US, how does the Spain government have the ability to know every single details of both country if Lucy doesn't declare all?
Spain may not have the resources to track every tax payer but Lucy is required to declare worldwide assets as a tax resident of Spain and she may face penalties, non-renewal of residency or prison if they find out she did not.
What a great video! Thank you. ❤
thank you so much. Hard subject to explain but glad it's worked out for many 😊
Really informative, thank you both!
thank you for watching. Glad it helps
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.
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.
Great information to consider. Thanks guys!
Thanks for watching and look out for our follow up Q&A video with Pro Spain Consulting.
Question: if me and my wife are retirees with full age, receiving social security benefits together for usd$29000, based on the US bracket, WE wouldn't have to pay taxes for beeing under the bracket. Since we pay $0 taxes in the US, once we start living in spain as legal residents for over 183 days, according the agreement between the us and spain to avoid double taxation, techically, we shouldn't have to pay taxes in spain,isn't?
It is our understand that as tax residents in Spain, you will be taxed in Spain on your worldwide income including social security. If you owed taxes in the USA then the double taxation treaty between the USA and Spain would ensure that you are not double taxed on the income. There are so many nuances to each person's tax situation that we highly recommend speaking with a professional tax consultant like Pro Spain Consulting before considering a move.
Good video, tx for that. So daytrading is capital gains with maximum 28% tax or is it income tax?
Thank you! Great question and sorry we do not know the answer. We have already had our Q&A with Pro Spain and will be publishing the video soon. They are offering our viewers a complimentary 20 minute consultation if you reach out through our link in the description. 😊
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.
Does this apply to capital gains from selling stocks as well? Will it be taxed both in US & Spain if we sell stocks?
Yes, it includes capital gains from the sale of stock as Spain taxes you on your worldwide income. If you are a US citizen you will also owe tax but due to the double tax treaty you will receive a credit so that you are not double taxed on the same income.
Thank you
Super informative thanks a lot for sharing
Glad it was helpful!
So, if I'm a Spanish Tax Resident with $100K worldwide income and pay about 33% or 33K in euros to Spain and my US tax rate would be only about 20% or 20K , then the Foreign Tax Credit would cancel out the US Tax ( 20K ) and have an additional 13K carry forward to future years ?
It is our understanding that you can carry forward the unused tax credit for 10 years. We would suggest confirming with a US tax accountant though as we have never done this.
Here’s the simplified version: You always pay your U.S. taxes first. If the country you’re living in (like Spain) has higher taxes, you only pay the difference. So, if you pay 20% to the U.S. and Spain wants 40%, you pay Spain the extra 20%. This way, you’re not double-taxed on the same income. Each country gets its fair share.
@@Take5North Understand that. Hopefully, the additional Spain tax ( in this case 20K ) would be offset/compensated by cheaper Cost of Living and better lifestyle ?
@@Take5Northwe actually prefer filing a US tax extension, paying taxes to our country of residence and then filing our US taxes and taking a tax credit for the amount paid to our country of residence. Either way works so it is just determining which option is best for you.
@@getsmartpaulthat's how we see it and we really enjoy the Spanish lifestyle!
I see you have the national tax rates on your video, are there not regional taxes as weel that you would have to pay on top of the national taxes?
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.
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
Good video. Worth mentioning that the current (2024) limit for the Wealth Tax in Catalunya and Valencia is only 500k€ after which you pay.
Thank you and yes that is definitely worth mentioning!
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!
Government service pension from Spain or your country of origin?
Your country of origin.
@@SeekingParadiseBugs thank you. I'm currently a deputy and getting ready for retirement.
Congrats on your upcoming retirement!!
I have spouse visa as my wife has a working visa. I'm working for canadian company as a remote contract employee. What will be my tax deductions for each month?
Thanks for watching and commenting! Unfortunately, we do not know the answer to give you based on your individual circumstances. Pro Spain Consulting would be happy to help you and is offering our viewers a complimentary consultation via the link in the description. 😊
Very helpful video!
thank you Alex! 😊
Thank you for the information. I only wish you properly articulated the words so that your diction is not so rushed and choppy.
Thank you for watching. We did not realize we weren't properly articulating our words and will make note.
Very good video!!
Thank you very much!
Hire a competent Spain based accountant is the best advice.
Absolutely right!
Great video!
Thanks so much! We appreciate your support!! 😊
Is there a tax when a fund in US is transferred to Spain ?
If you mean transferring money from a checking account in the USA to a checking account in Spain, there should not be a tax. Tax is based on income and income you receive worldwide is taxed in Spain when you are a tax resident there. Of course there is typically a fee from the institution you use to transfer funds and remember the conversion rate also if going from USD to Euros. We always recommend speaking with a professional such as Pro Spain Consulting before making a move to minimize any taxes. They are offering our viewers a free 20 minutes consultation by clicking on the link in the description.
Zs is rental income being taxed if it's from outside spain?
If you are a tax resident in Spain then rental income received from outside of Spain will be taxed. There are many deductions available to reduce the taxable amount though.
@@SeekingParadiseBugs and if the bankaccount on receiving end is non spain?
@@noneofyourconcern5448 As a tax resident in Spain, you pay taxes on your worldwide income and must file a form declaring accounts and assets outside of Spain. Our follow up video Spanish Tax Questions Answered for Expats has info about rental income outside of Spain that might be helpful to you. It's a Q&A we did with Pro Spain Consulting.
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.
@@michellefoxthorpe9796 could you tell me who did you get the free tax consult from?
Pro Spain Consulting has many lawyers that can help you. We have worked with Alina and Flor or Alia as well.
@@SeekingParadiseBugs Thank you!
If your annual income is over 22,000 euros, only then you are obligated to file for your Spanish income tax.
We believe that is only if it is less than €22,00 and comes from a single employer. If you have multiple sources you may be obligated to file depending on the amounts and sources. This is one of the reasons we always advise people to speak with a tax professional, something we are definitely not. 😊
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.
@@keb107
Good to know
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!!
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.
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! 😊
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!
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.
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.
and I thought the US taxes were bad...
Spain taxes are definitely challenging.
Thank you. Very informative. I get it. Spain wants to house the poor and disincentivize the middle and upper class from moving there. I'm out
As US citizens we are optimized for US taxes but Spain beckons to us. Best of luck!
Spain is beautiful, but I can’t see giving my money away. The taxes are useros
It really depends on the amount and type of income you have to determine how high your tax rate would be there. We really appreciate the quality of life and the services available due to the higher taxes. It is definitely a personal decision based on each person's individual circumstances and so important to understand the tax situation before you make a move.
Joseph Perez..Are you a Jew?
Taxing SS income is a deal breaker.
You want to move here because this is a great country.
And yet you don't want to pay what is needed tl make it great.
Enjoy the USA and stay there for good.
We actually do not have an issue paying taxes, especially to live in such a great country. We just want to make sure we understand our tax liability and share that with other people considering the move. Better to know before you go than be surprised after you have moved.
Wow, that's a lot of tax.
Yes, many European countries have higher tax rates than the USA, however, in the USA you pay more for healthcare, education, childcare, property taxes, etc.
@SeekingParadiseBugs Absolutely. I'm not saying it's not worth it. I was just surprised at the rate for the lowest bracket. It gives you more freedom because you aren't locked into a job just to get healthcare.
@@Toaster-v1z We were surprised too and it is one of the reasons why we wanted to share this video. It is so important to understand before you make a big move!
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.
God, I detest the word "expat" so much.
Just use immigrant.
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.
INMIGRANTS, no EXPATS
US resident lived in spain 2019-2022, filing US and Spain resident taxes. paid $3000 spain income tax in 2019. in 2023 they are informed they owe another $20,000 in spain taxes on US IRA distribution . in 2024 lives all year US.. can they take the $20,000 spain tax paid as a foreign tax credit on their 2024 1040?
That is a great question for a US tax accountant as we are not professionals. Due to the double taxation agreement, we believe you can adjust your US taxes. You may have to file an amended return or returns for the appropriate year(s) though.
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.
It's really bad in Spain,I do not recommend nor for work or pleasure.
Sure the weather is nice but that's about it,nothing good other than weather has come out of this place.