Taxes for US Citizens Moving to Spain: A Complete Guide

Of everything US citizens moving to Spain ask us before relocating, one question comes up more than any other: what happens to my money once Spain considers me a resident? It’s also the question most people research too late, after the move, instead of before it.

Legal framework: Spanish Personal Income Tax Law (Ley 35/2006, including the Article 93 inbound-expatriate regime known as the Beckham Law), the US-Spain Double Tax Treaty, and Modelo 720 reporting rules.

When Does Spain Consider You a Tax Resident?

Spain primarily applies two tests, and meeting either one is enough on its own:

Spain generally doesn’t apply a split-year rule either: once you’re deemed resident, you’re treated as resident for the entire calendar year, subject to whatever the applicable treaty provides (Article 9, Ley 35/2006).

IRPF: The Taxes US Citizens Moving to Spain Actually Pay

Once you’re resident, Spain’s IRPF (Impuesto sobre la Renta de las Personas Físicas) taxes your worldwide income, split into two separate bases that work very differently from each other.

This is the general rule. If you qualify for Spain’s special inbound-expatriate regime, commonly known as the Beckham Law (Article 93, Ley 35/2006), you’re taxed under a special framework based largely on Spain’s non-resident income tax rules. Most foreign-source investment income is generally outside Spanish taxation under this regime, although employment income and certain other income remain taxable in Spain under specific sourcing rules. Modelo 720 is generally not required, while Wealth Tax and the Solidarity Tax generally apply only to assets and rights located or exercisable in Spain. Eligibility and the details are worth checking separately with a professional.

The General Base: Work-Type Income

The general base covers income tied to work, pensions, and property, and carries the higher rates: combined state and regional marginal rates commonly run from the high 40s up to over 50%, depending on your region and income level. A marginal rate only applies to the income above each bracket, not to everything you earn.

These are the examples we see most often among our American clients:

The Savings Base: Investment-Type Income

The savings base covers returns on capital, and carries lower rates, from 19% to 30%, regardless of which region you live in. The most common examples here:

• Dividends from US stocks or funds.
• Interest earned on savings accounts, bonds, or CDs.
• Capital gains from selling investments or property.

The US-Spain Tax Treaty: What the CDI Actually Does

The Convenio de Doble Imposición (CDI) determines which country may tax each category of income and how double taxation should be relieved. It doesn’t work the same way for every income type.

Depending on the type and source of income, relief may come through a foreign tax credit in Spain, in the United States, or through the treaty’s special coordination rules for US citizens (the saving clause and related re-sourcing rules). Some US government-service pensions are taxed differently again, and the outcome can depend on the recipient’s nationality, not only on who’s paying. The correct mechanism has to be worked out per income category, not assumed from one rule of thumb.

Modelo 720: Reporting Foreign Assets

Modelo 720 isn’t a tax, it’s a disclosure form. If you’re a Spanish tax resident, you may need to tell the tax authorities what you hold abroad: foreign bank accounts, certain foreign securities and investment interests, insurance products, and foreign real estate, each treated as its own separate category.

You only need to report a category if its total value is above 50,000 euros. That threshold applies to the whole category, not to each individual account, so three US accounts adding up to 60,000 euros do need to be reported, even if no single one crosses 50,000 euros on its own. The ordinary filing period runs from 1 January to 31 March of the year after the one you’re reporting on.

Once you’ve filed the first time, you don’t need to file again every year automatically. A new filing is generally required if the value of a previously reported category increases by more than 20,000 euros compared with the value in the last Modelo 720 filed for that category, or if you sell, close, or otherwise dispose of something you’d previously declared. There’s no tax attached to Modelo 720 itself, but filing it late or not at all carries its own, quite real, penalties. One common mix-up: cryptocurrency held abroad is generally reported separately, through Modelo 721, not Modelo 720.

Paying tax and reporting assets are two different obligations, and Wealth Tax works differently from both.

Impuesto sobre el Patrimonio: Spain’s Wealth Tax

Wealth Tax doesn’t look at what you earn, it looks at what you own. Every 31 December, Spain values your worldwide net assets, property, bank balances, investments, business interests, minus deductible debts, and taxes the amount above a minimum exemption.

Under the default state rules, an individual may benefit from a 700,000 euro minimum exemption, plus an exemption of up to 300,000 euros for a qualifying habitual residence. Regional rules may set different minimum exemptions. This is an individual tax, not a joint one: there’s no combined filing for couples, so each spouse applies their own exemptions to the assets they legally own.

Where Wealth Tax gets confusing is that it’s a regional tax, and the seventeen autonomous communities handle it very differently. Some apply a 100% rebate, which means residents effectively pay nothing at all below the Solidarity Tax threshold (more on that below). Others keep the tax fully in place.

Green = regions currently offering a full or substantial Wealth Tax rebate, subject to regional conditions and temporary coordination rules with the Solidarity Tax. Red = regions where Wealth Tax generally remains payable, although exemptions and rates vary significantly. *The Balearic Islands tax Wealth Tax but apply a notably high regional minimum exemption, so the practical impact is smaller than in other “taxed” regions.

Indicative treatment based on the legislation in force at the time of publication. Regional rules can change and should be confirmed for the relevant tax year.

Even with a 100% rebate, you may still have to file the return simply because your gross assets (before any exemption) exceed 2 million euros, even though nothing is ultimately owed.

Impuesto de Solidaridad de las Grandes Fortunas: The Large Fortunes Tax

This is a separate, national, and also individual tax for individuals with substantial net wealth. The legal threshold is net wealth above 3 million euros, but that’s not the same as the level where you actually start owing something: the first 3 million euros of taxable base is charged at 0%, and there’s a separate 700,000 euro minimum exemption plus any applicable asset exemptions on top. In practice, a positive liability for a resident typically only starts to appear somewhere around 3.7 million euros of net wealth, and possibly higher once exemptions are factored in.

Brackets rounded for readability (exact statutory thresholds: €3,000,000 / €5,347,998.03 / €10,695,996.06, per Ley 38/2022). Your effective liability depends on exemptions, deductions, and your individual taxable base.

It exists because some regions that traditionally offered full or substantial Wealth Tax rebates have temporarily modified those rebates to coordinate with this national tax; in others, the regional rebate keeps applying as before, but any resulting shortfall can still be collected through the Solidarity Tax at the national level. Whatever Wealth Tax you’ve actually paid gets deducted from the Solidarity Tax, so you’re never paying both in full on the same wealth. In plain terms: “Madrid has no Wealth Tax” is true for most residents, but not necessarily for individuals with net wealth above roughly 3.7 million euros.

What You Still Owe Back in the US

US citizens generally remain subject to US federal filing obligations on their worldwide income even while living in Spain. You may also need to file an FBAR if the aggregate maximum value of your foreign financial accounts exceeds 10,000 dollars at any point in the year, and possibly Form 8938, which has its own thresholds depending on your filing status and residence.

One point that’s easy to miss: the US-Spain treaty generally doesn’t cover US state income taxes. If you’re moving from a state like California, New York, or Virginia, it’s worth checking separately whether you’ve actually terminated your tax residence or domicile there, since some states are notoriously reluctant to let go.

A Real Case: How We Manage a High-Net-Worth Relocation

Take a couple relocating from Florida to Madrid: Robert and Diane, a retired finance executive and his wife. Robert individually holds a US brokerage portfolio worth roughly $3.2 million and a traditional IRA of around $650,000, both from his career before retirement. Between them they also have a rental condo in Miami generating about $40,000 a year, and they’ve just purchased an apartment in Madrid for €1.8 million, jointly owned.

Once resident, the Miami rental and any IRA withdrawals fall into the general base; the portfolio’s dividends and interest, roughly $95,000 a year, fall into the lower savings base. Because the Solidarity Tax is an individual tax, Robert’s personal net wealth, including his brokerage portfolio, his share of the properties, and the specific treatment of his IRA, needs to be calculated separately from Diane’s. Their combined household wealth doesn’t by itself determine whether the tax applies: what matters is each spouse’s own taxable base, after debts and exemptions.

This is also where the “Madrid has no Wealth Tax” assumption catches people out: if Robert’s individual wealth ends up above the practical Solidarity Tax threshold, Madrid’s usual 100% rebate won’t fully apply to him, so he may end up paying an amount similar either way, just through the regional return instead of the national one. Diane, holding less individually, may remain below that threshold entirely. The brokerage account and the Miami property must be reviewed under the relevant Modelo 720 categories. The IRA requires a separate analysis to determine whether it qualifies as a pension arrangement excluded from reporting or must be reported under a particular category.

Here’s how we typically sequence a case like this:

1. Model IRA withdrawal timing against the calendar-year residency rule, since a withdrawal made before the physical move can still count as Spanish-taxable income if the year as a whole ends up being treated as a year of Spanish residency.
2. Map every asset against the Modelo 720 categories before the filing period closes on 31 March, so nothing gets missed in the first year.
3. Check each spouse’s individual exposure to regional Wealth Tax and the national Solidarity Tax separately, based on actual ownership.
4. Coordinate with their US CPA on which country’s return carries the foreign tax credit for each income stream, case by case.
5. Set a filing calendar for both countries, so the US and Spanish deadlines don’t collide in the first transition year.

None of this makes Spain a bad place to build your life. It makes the planning window the part that matters, and that window is before the move, not after your first Spanish tax return is due.

This article is for informational purposes only and does not constitute legal or tax advice. Based on Ley 35/2006 (IRPF), including Article 93 (the Beckham Law inbound-expatriate regime), the Double Taxation Convention between Spain and the United States, Ley 19/1991 (Impuesto sobre el Patrimonio), Ley 38/2022 (Impuesto de Solidaridad de las Grandes Fortunas), and Spain’s Modelo 720 reporting rules, current as of 2026. Any tools referenced above provide estimates only and do not replace a personalized professional consultation.