Filing Taxes as an American Expat in Spain: What You Need to Know

It’s one of the less glamorous parts of life abroad—right up there with bureaucratic appointments and chasing apostilles—but understanding your tax obligations as an American living in Spain is essential. And, if done right, it doesn’t have to be overwhelming.

Regardless of what amazing plan you decide to follow once you arrive in Spain, one truth follows you across the Atlantic: the IRS still expects to hear from you. But there’s good news—Spain has its own tax treaties, exclusions, and deductions that can help reduce double taxation. The key is knowing what to file, when to file, and how to stay compliant—on both sides of the ocean.

Here’s what every American expat needs to know about taxes in Spain.

Dual Tax Residency: Yes, You May Owe Taxes to Both Countries

Unlike many countries, the U.S. taxes its citizens on worldwide income, no matter where they live. This means that even if you’ve become a tax resident in Spain, you still need to file an annual U.S. tax return.

In Spain, you’re considered a tax resident if:

• You spend more than 183 days in the country during the calendar year.

• Your main economic interests are in Spain (for example, your primary income is generated here).

Once classified as a Spanish tax resident, you're taxed on your worldwide income in Spain as well.

But don’t panic—Spain and the U.S. have a tax treaty (last updated in 1990, available here) that helps avoid double taxation. However, this doesn’t happen automatically. You still need to report and file properly to claim benefits under the treaty.

Dual tax residency

What U.S. Expats in Spain Must File

🇺🇸 U.S. Obligations

Even if you earn no U.S. income, you must:

• File Form 1040 annually.

• If you earn more than $120,000+ (threshold varies slightly each year), you may need to file Form 2555 for the Foreign Earned Income Exclusion (FEIE).

• You may also be eligible for the Foreign Tax Credit (Form 1116).

• If you have foreign (in this case Spanish or European) bank accounts exceeding $10,000 in aggregate at any time in the year, file FBAR (FinCEN Form 114) and possibly FATCA (Form 8938).

• Deadlines: The standard deadline is April 15, with an automatic extension to June 15 for expats. You can request a further extension to October 15 if needed.

🇪🇸 Spanish Obligations

As a tax resident of Spain, you must:

• File the Declaración de la Renta (personal income tax return) between April and June for the previous tax year.

• Declare worldwide income, including foreign pensions, rental income, dividends, and freelance income.

• File Modelo 720 if your foreign assets (bank accounts, properties, securities) exceed €50,000 in total. This is an informational return, but penalties for errors or non-filing can be severe—up to €10,000 or more.

Notably, Spain's progressive tax rates range from about 19% to 47%, depending on income level and autonomous community. Local taxes can apply too.

Common Pitfalls (and How to Avoid Them)

• Double Taxation: This can often be avoided using the Foreign Tax Credit or FEIE on your U.S. return, but you must choose carefully.

• Assuming Spain Doesn’t Care About Foreign Accounts: They do. Modelo 720 is taken seriously, and fines can be crushing if you fail to file.

• Underreporting Freelance or Digital Nomad Income: Even if you work for a U.S. company or get paid via PayPal, it's reportable in both countries if you are tax resident in Spain.

Why You Shouldn’t DIY This (At Least Not Entirely)

Tax compliance as an American in Spain is not for the faint of heart—or for TurboTax. The U.S.-Spain tax treaty is nuanced, Spain’s digital filing portals are often finicky, and penalties for mistakes can linger for years.

That’s why we recommend working with professionals who know both systems—like our trusted partners at InnoTaxes, who specialize in helping Americans navigate Spanish tax law while staying compliant with the IRS. Whether you're a salaried employee, remote worker, or self-employed entrepreneur, they can save you time, stress, and potentially thousands in fines.

The Bottom Line: Be Proactive, Be Precise

Living in Spain can feel like a dream—long lunches, fresh air, slow mornings. But don’t let your tax situation become a nightmare. Stay informed, stay organized, and ask for help when needed.

If you're still in the planning stages of your move—or knee-deep in NIE paperwork—our course, “Immigrating to Spain as a Family,” breaks this all down: visa types, tax implications, relocation logistics, and everything in between. It’s tailored for families who want a beautiful life and a clear, legal path forward.

Click here to sign up as an honorary pilot course member or click below to book a consultation with InnoTaxes to make sure your move (and your money) are in good hands.