SPANISH TAXES for EXPATS | What you MUST KNOW living in SPAIN
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- čas přidán 1. 06. 2024
- Thinking of moving to Spain and want to know how much tax you would have to pay as a Spanish tax resident? In this video we cover what you need to know about Spanish taxes for expats living in Spain. From personal income tax to wealth tax and inheritance tax, Spain taxes are complicated and ever changing. Plus, once you have lived in Spain more than 183 days in a year, you are a tax resident for that entire year. It’s critical to understand the rules and time your move so as not to pay thousands in taxes that you don’t have to.
Tax talk can be dry and confusing but we’ve done our best to keep it simple and easy to understand. Let us know what you think, if you’re planning on making a move to Spain and if there is anything else we should know.
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📑CHAPTER LIST:
00:00 Intro
01:39 Types of Spanish Residency Visas
02:38 Spanish Tax Resident
04:12 Double Taxation Treaties
04:52 Types of Taxes in Spain
05:08 Personal Income Taxes in Spain
05:44 2024 General Taxable Income Rates in Spain
07:52 2024 Savings Taxable Income Rates in Spain
08:21 What Tax Allowances are there in Spain?
09:19 Capital Gains Tax in Spain
11:13 Wealth Tax and National Solidarity Tax in Spain
13:00 Inheritance Tax: Spanish Succession Tax
14:49 Modelo 720 Form - Declaration of Foreign Assets
15:14 Beckham Law Tax Regime
15:48 Final Thoughts
16:40 Outro
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Tax Benefits for Expats in Spain
DISCLOSURE:
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*Also, sometimes we discuss financial topics. We are not financial professionals, please consult a licensed advisor for financial advice.
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Thank you for another helpful video. This stuff is always difficult to find reliable information on and you guys do a great job of making it accessible. (If only Shakira knew about your channel, she could have saved herself a lot of aggravation.)
you crack me up! thank you. Shakira could have saved herself money and her marriage too 😅
Gonna move to Spain soon. I hope they keep the inheritance and wealth tax.
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.
Super informative
Thank you
thank you! it was a lot of info. Glad to help.
Clear and concise! Thanks you two!
Our pleasure!
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.
Great video, detailed and concise! Well done and thank you
thanks so much! 😊
Great Video! Lots to think about!
Thank you!
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. 🥰
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.
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.
Wonderful job explaining this difficult topic, well done! thank you
thank you! it was hard and we're glad it helps ☺️
Super informative thanks a lot for sharing
Glad it was helpful!
Very helpful video!
thank you Alex! 😊
Great video!
Thanks so much! We appreciate your support!! 😊
Very good video!!
Thank you very much!
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?
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? 🤷🏽
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.
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.
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.
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
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.
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.
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.
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.
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!
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.
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.
You do know what "expat" means, don't you ? It means someone temporarily in the country, such as a contactor or a student. A permanent resident is an immigrant.
We know this has been a controversial term and we actually consider ourselves expats right now as we live in different countries as temporary residents. We will consider ourselves immigrants when we decide on our forever home and obtain permanent residency in that country.
Great video guys.....Spain, you will not sniff my tax money. 😂😂😂. But i will visit every now and then.
Thanks so much! It's definitely a great place to visit!!
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.
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.
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!
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! 😊
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!
I guess I am out!
lol...don't get discouraged! We highly recommend talking with a professional like Pro Spain Consulting to assess your individual situation. Check out our link in the description box for a free 20 minute consult with them.
Not expats, migrants.
We know this has been a controversial term and we actually consider ourselves expats right now as we live in different countries as temporary residents. We will consider ourselves immigrants when we decide on our forever home and obtain permanent residency in that country.
IMMIGRANTS
We know this has been a controversial term and we actually consider ourselves expats right now as we live in different countries as temporary residents. We will consider ourselves immigrants when we decide on our forever home and obtain permanent residency in that country.
Didn't explain Nomad options 😮
We didn't break it down in detail but it's our understanding that if you are a tax resident then the information we've provided applies unless you qualify for spacial tax considerations under the Beckham law. We didn't address taxes for non-residents but would consider doing a video on this in the future, especially since we may be buying a property there before becoming tax residents.