Are you wondering, “How do I move to Spain from the US to live my best life in a responsible way?”
Well, you’ve come to the right place! Spain is a gorgeous country of contrasts, from shimmering coastlines to arid desert-like conditions, from bucolic villages to happening urban city scenes. It will be an adventure of a lifetime. However, you’ll want to plan out the legal and financial requirements before you embark on this journey.
In this comprehensive guide, we’ll provide essential information for Americans who are considering a move to Spain. From taxes and visas to healthcare and cultural adaptation, we’ll cover everything you need to know.
Table of contents
- Understanding Tax Requirements
- Owning Property in Spain
- Business Ventures and Taxes
- Double Taxation Woes
- Spanish Visas to Make It Happen
- Bringing Your Children Along
- Healthcare Matters
- How do I move to Spain from the US? Buying Property in Spain
- Using Castilian Spanish For Work
- Adapting to Spanish Culture
- Final Tips for a Successful Move
Understanding Tax Requirements
Once you understand the tax requirements when moving to Spain from the US, you will know whether the move is actually financially feasible for you. Familiarize yourself with the tax laws pertaining to your situation, so that you can navigate the complexities and optimize your tax position in Spain.
Americans Earning Salaries from Companies Outside of Spain
If you plan to be an American living in Spain and earning your salary from a company outside of Spain you will likely pay taxation on your worldwide income. This means that you will be required to report and pay taxes on your income earned from foreign sources (including the US).
To clarify, Spain follows a progressive income tax system. So, your tax rates increase as your income increases. These tax rates range from 19% to 50%, corresponding with your income level.
|Your taxable income is divided between the general base and the savings base:|
|The General Base consists mainly of the employment income and real estate income and the progressive tax rate ranging up to 50%. |
However, the final tax rate depends on the autonomous community of residence of the individual.
|The Savings Base consists mainly of investment income (i.e. interests, dividends and capital gains) and the tax rate is progressive from 19% to 28%|
Income Tax Range
|Lower Income Brackets |
For individuals with lower income levels, the income tax rates are relatively lower. The exact income thresholds and rates vary based on many factors. As an example, the tax rates in the lower brackets COULD range from 19% to around 30%.
|Intermediate Income Brackets |
As your income level increases, you enter the intermediate income brackets, where the tax rates also increase. In these brackets, the tax rates COULD range from around 30% to 37%.
|Higher Income Brackets |
For individuals with higher incomes, the top income tax bracket applies. In this bracket, the tax rate can reach up to 50%. The specific income threshold for the highest bracket may vary but generally applies to individuals with income exceeding a certain threshold.
That said, income tax rates and salary ranges are subject to change due to legislative updates or government policies. Therefore, it’s essential to consult the official sources or seek advice from a tax professional to ensure accurate and up-to-date information based on your specific circumstances.
Americans Earning Salaries from a Spanish Business
If you are an American earning your salary from a Spanish business while residing in Spain, you will be subject to Spanish income tax. Your employer will deduct the tax from your salary through the Pay-As-You-Earn (PAYE) system.
Additionally, you may also have Social Security contributions deducted from your salary. These contributions go towards healthcare, pensions, and other social benefits. As a US citizen, you may also have US tax obligations, but you can take advantage of the foreign earned income exclusion and the foreign tax credit to mitigate double taxation.
American Business Owners Living in Spain
If you are an American business owner living in Spain, you will need to understand the tax requirements for your business. The tax obligations will depend on the legal structure of your business, such as whether it’s a sole proprietorship, partnership, or corporation.
As a business owner, you will be subject to corporate tax on the profits generated by your business. The corporate tax rate in Spain is generally 25%. However, specific tax incentives and deductions may apply based on the nature of your business activities.
It’s crucial to comply with the reporting and filing requirements for both Spanish and US taxes. Depending on the nature of your business and the income earned, you may need to file additional forms such as the Foreign Bank Account Report (FBAR) and Report of Foreign Financial Assets (Form 8938).
To navigate the complex tax landscape as an American business owner in Spain, it is advisable to consult with a tax professional who specializes in international taxation. They can provide guidance on optimizing your tax position and ensuring compliance with both Spanish and US tax laws.
Owning Property in Spain
Firstly, if you own property in Spain, you will be subject to annual property tax, known as Impuesto sobre Bienes Inmuebles (IBI). The tax is calculated based on the cadastral value of the property, which is an administrative value assigned by the local authorities. The tax rates can vary depending on the municipality where the property is located.
In addition to the IBI, if you rent out your property, you may also have rental income tax obligations. Rental income is subject to progressive income tax rates, ranging from 19% to 50%, depending on the income level.
Following, rental income in Spain is subject to progressive income tax rates, which means that the tax rate increases as your rental income rises.
For unrented properties not considered as a habitual residence in Spain (i.e. second homes), a presumptive income tax must be paid. The taxable base is calculated as 2% or 1.1% of the cadastral value assigned by the the Cadastral Register.
Please keep in mind that rates are subject to change based on future tax reforms or updates to the tax legislation.
It’s important to note that these tax rates are specific to rental income and may differ from the tax rates applicable to other types of income, such as employment income or business profits.
It’s essential to keep track of your property-related expenses and consult with a tax professional to ensure proper reporting and compliance with the tax obligations related to property ownership in Spain.
Business Ventures and Taxes
If you’re thinking of starting your own business in Spain, first you must understand the tax requirements. Corporate taxes and VAT (Value Added Tax) are just some of the taxes you’ll have to contend with.
Some of the taxes you may have to pay as an American– depending on your situation– include the following. Familiarize yourself with the specific tax obligations and regulations based on your business type.
When starting a business in Spain, you will pay corporate taxes on the profits generated by your business. To begin, the corporate tax rate in Spain is generally 25%.
However, you might be able to take advantage of certain tax incentives and deductions, depending on your business activity.
Value Added Tax
Value Added Tax (VAT) (the Impuesto Sobre el Valor Añadido or IVA), is a consumption tax you pay on your sale of goods and services in Spain. The standard VAT rate is 21%, although reduced rates of 10% and 4% apply to specific goods and services.
As a business owner, you’ll be responsible for charging VAT to your customers, collecting it, and submitting it to the Spanish tax authority.
Social Security Contributions
As a business owner in Spain, you’ll contribute to Spain’s Social Security system. Social Security contributions cover healthcare, pensions, and other social benefits. These contributions are typically calculated based on your business’s activities and the salaries paid to your employees. It’s important to understand the specific requirements and rates applicable to your business.
Apart from the national taxes mentioned above, you may also be subject to local taxes depending on the location of your business. These taxes can vary from one municipality to another and may include taxes such as business tax (Impuesto sobre Actividades Económicas or IAE) or property tax (Impuesto sobre Bienes Inmuebles or IBI).
Double Taxation Woes
The idea of double taxation often scares away the international community from moving abroad, but is it a problem for Americans in Spain?
Not really. The US and Spain have tax treaties in place to prevent double taxation. These agreements ensure that you won’t be taxed twice on the same income. Under the tax treaty, specific provisions are in place to ensure you don’t pay taxes twice on the same income. Ways to avoid double taxation include:
One of the common ways to prevent double taxation is with a tax credit. A tax credit helps taxpayers to offset the taxes they pay in one country with the taxes owed in the other. For example, if you pay taxes on your income in Spain, you may be eligible to claim a foreign tax credit in the US.
Tax Exemptions or Deductions
Uniquely, certain types of income are deducted or exempt under the tax treaty. For instance, income from dividends, interest, and royalties may be taxed at a reduced rate or exempted in one of the two countries based on the tax treaty provisions.
Treaty Tiebreaker Rules
In cases where an individual or business is considered a tax resident in both the US and Spain, the tax treaty typically contains tiebreaker rules to determine the individual’s or entity’s residence for tax purposes. These rules help determine which country has the primary right to tax your personal or business income.
All of that said, the specific provisions of the tax treaty vary based on the type of income, residency status, and more. Therefore, it’s crucial to review the tax treaty provisions and seek professional advice to ensure proper application and to optimize your tax position.
To claim the benefits of the tax treaty and avoid double taxation, you may have to provide certain documentation and follow specific reporting procedures. Chat with a Tax Lawyer who specializes in Spanish Law.
Spanish Visas to Make It Happen
Wondering “How do I move to Spain from the US with the right visa?” Popular options for Americans include the Digital Nomad Visa, the Non-lucrative Visa, which allows you to reside in Spain without working, and the Entrepreneur visa, designed for those planning to start a business.
Delve further into the visa category of your choosing to better understand the requirements, limitations, and application process.
Bringing Your Children Along
If you’re wondering “How Do I Move To Spain From the US with my children?” their well-being is most likely one of your top priorities. Spain offers quality education options, both public and private. While International Baccalaureate (IB) schools with an international curriculum are often appealing for American families, so too are the several American schools sprinkled throughout the country. By enrolling your children in an American school, you are ensuring they can earn an American diploma. This facilitates them being able to attend university in the US at a future date.
By the same token, the IB diploma is also accepted by most universities in the US. Keep in mind, the curriculum tends to be designed for more independent students. No matter where you decide to move, research schools in your desired location and consider any language barriers your children may face before making your decision.
Applying for any of these private schools is a process that often takes time, and not only in the research. The applying, testing, interviewing, and wading through the waitlist might take some patience, but will be worth it.
Understanding healthcare options is essential when moving to Spain from the US. Spain boasts a renowned healthcare system, and as an American, you can access it through the public system as a resident or by contributing to it. Private health insurance is also available, offering additional benefits and flexibility.
Of course, as an American living in Spain, you may have the option to access public or private healthcare services.
Spain has a public healthcare system known as the Sistema Nacional de Salud (SNS), which provides healthcare services to residents and legal residents who contribute to the system through social security contributions or other means. Read our pros and cons for Americans to make sure you’re getting the coverage you need.
Pros and Cons of the Public Healthcare System for Americans
|Pros of the Public Healthcare System for Americans||Cons of the Public Healthcare System for Americans|
|Universal Coverage: The public healthcare system offers universal coverage, ensuring access to healthcare services for legal residents.|
Quality of Care: Spain’s healthcare system has a high standard of care, with well-trained medical professionals and modern facilities.
Cost-effective: Compared to healthcare costs in the United States, public healthcare in Spain is more affordable and also has lower out-of-pocket expenses.
Comprehensive Services: The public system provides a wide range of services, including primary care, specialist consultations, hospital care, and emergency services.
|Waiting Times: Depending on the region and timing, it might take longer to see a doctor or specialist than what you are used to as an American.|
Language Barrier: While many healthcare professionals in Spain speak English, language barriers can occasionally pose challenges, especially in smaller towns or rural areas.
Limited Provider Choice: The public system assigns you a primary care physician, and referrals are required to see specialists. This limits your choice of healthcare providers.
Pros and Cons of the Private Healthcare System for Americans
Private health insurance is also available in Spain and provides additional benefits and flexibility. Considering purchasing a private healthcare plan in Spain as an America? Read on for our pros and cons.
|Pros of the Private Healthcare System for Americans||Cons of the Private Healthcare System for Americans|
|Choice of Providers: With private health insurance, you have the freedom to choose your healthcare providers, including doctors and hospitals.|
Shorter Waiting Times: With private healthcare, it often takes less time to see a specialist or get a procedure.
English-Speaking Services: Some private insurance providers offer services in English, making communication easier for non-Spanish speakers.
Additional Coverage: Private health insurance sometimes has additional benefits, such as coverage for certain elective procedures or access to premium facilities.
|Cost: Private health insurance premiums can vary depending on the coverage and insurer, and they are often higher than those in the public system.|
Exclusions and Limitations: Private insurance plans may have certain exclusions or limitations on coverage, so it’s important to carefully review the terms and conditions.
It’s also worth noting that some Americans in Spain opt for a combination of public and private healthcare. You may rely on the public system for routine care. And then, you may use private insurance for faster access to specialized services or specific preferences.
Regardless of the healthcare option you choose, familiarize yourself with the specific coverage, costs, and procedures associated with the chosen healthcare provider or insurance plan.
How do I move to Spain from the US? Buying Property in Spain
Spain’s rich geographical features and vibrant cities make it an appealing place to buy property. Wondering, “How do I move to Spain from the US and buy a home?”
Again, research the property market, legal requirements, and potential pitfalls before making your decision.
The three most popular areas for Americans to purchase property are in the cosmopolitan ambiance of Barcelona, the capital of Madrid, and the coastal charm of the Costa del Sol. Each of these popular American destinations has property options to suit a range of budgets and preferences.
Barcelona has a well-connected airport, amazing beaches, and a glitzy international population. Popular neighborhoods for Americans in Barcelona include Eixample, Gràcia, and Sarrià-Sant Gervasi. In these areas, you’ll find a mix of modern apartments, historic buildings, and charming streets. Property prices there vary significantly based on location and property type. The average price per square meter in Barcelona ranges from around €3,000 to €7,000. This large discrepancy depends on the neighborhood and property features.
As the capital city of Spain, Madrid attracts many Americans with its rich history, world-class museums, and bustling lifestyle. American living hotspots include Salamanca, Chamartín, and Chamberí. These areas offer a range of housing options. There are upscale apartments and traditional buildings that range in price from approximately €2,500 to €6,000.
Costa del Sol
Finally, in the beach region of the Costa del Sol, situated along the southern coast of Spain, popular American destinations include Marbella, Estepona, and Fuengirola. These areas offer a mix of apartments, villas, and townhouses, often within close proximity to the coast. Prices for property along the Costa del Sol can vary wildly. Depending on the specific location, proximity to the beach, and property size, the range goes from about €1,500 to €6,000 per square meter.
Of course, property prices frequently fluctuate based on market conditions, demand, and other factors. To add to that, the neighborhood or area within each city may have a slightly different property price range.
Using Castilian Spanish For Work
Of course, finding employment in Spain requires research and preparation. Networking, learning Spanish, and utilizing online job portals are effective ways to find job opportunities. But be aware that the job market is very competitive. Language proficiency is going to be a requirement for certain positions. If you are asking yourself, “How do I move to Spain from the US?” for the long run, speaking the language is a good indicator of whether you will be able to stick the landing.
The official language of Spain is Spanish (Castilian), although different regions have secondary official languages. Having a good command of the official language of the region you plan to move to is highly beneficial for communication and integration with your coworkers.
The level of language proficiency required will vary depending on the job type and the employer’s specific requirements. Customer-facing roles that involve direct interaction with Spanish-speaking clients or customers, such as sales, customer service, or teaching positions, typically require a higher level of Spanish proficiency. On the other hand, technical or specialized positions may have less stringent language requirements.
Finally, to improve your language skills and enhance your employability in Spain, consider enrolling in Spanish language courses or immersion programs. Remember, as an American, the type of Spanish you might be familiar with from Central America, sounds quite different from Castilian Spanish. Prepping with a Castillian Spanish speaker will make a big difference. This will not only help you communicate effectively but also demonstrate your commitment and adaptability to potential employers.
Adapting to Spanish Culture
Adapting to the Spanish way of life is a fun and exciting part of your relocation. Embrace the relaxed siesta culture, learn some Castilian Spanish phrases, and adjust to the late dinner schedules. Spaniards are known for their warmth and hospitality. However, it can take several years of residence to be accepted into inner friendship circles. Be patient, and immerse yourself in the local culture. Make new connections, and embrace the experience. Every region in Spain has a distinct culture. Take the time to research the specifics of your region before moving.
Final Tips for a Successful Move
Now that you know how to move to Spain from the US, remember to conduct thorough research. Seek professional advice when needed, and prepare yourself financially and emotionally. Utilize available resources, language learning tools, and expat communities to facilitate your transition. Embrace this opportunity to explore a new culture and enjoy everything that Spain has to offer.
To conclude, if you’re an American planning to make the move to Spain, use the contact form below. Our team of multilingual experts will provide you with the guidance you need. They will give you the up-to-date information, and assist with all the paperwork specific to your situation. By entrusting our seasoned legal professionals, you’ll have more time to focus on the property search and building local connections. Let us help you make your transition easy as pie (or easy as a slice of tortilla de patata).