US Citizen Living in Spain Taxes: A Comprehensive Guide to Double Taxation, IRPF & Tax Credits

If you’re a US citizen living in Spain, taxes can feel complicated because you must file a U.S. tax return no matter where you live, while Spain taxes residents on their worldwide income once they spend more than 183 days in the country. This creates a dual-filing obligation that most expats never experience.

Once you become a Spanish tax resident, you are subject to progressive income tax (IRPF), regional Spanish tax rates, and annual filing between April and June. At the same time, the United States still requires a federal tax return and foreign asset reporting.

The good news is that the US–Spain Tax Treaty and the Foreign Tax Credit help reduce or remove double taxation when, according to the treaty, both countries have the right to tax the same income.

This guide explains the essentials of taxes in Spain for Americans, helping you understand both systems clearly and prepare for proper tax planning.

Spanish Tax Residency and Standard Rates (IRPF)

For US citizens living in Spain, understanding when you become a Spanish tax resident and how Spain applies its income tax rules is key to remaining compliant.

When You Become a Spanish Tax Resident

You are a tax resident if:

• You spend 183 days in Spain in a calendar year
• Spain becomes your center of vital interests, including work or family
• If your spouse and children reside in Spain for the majority of the year, you will generally be considered a tax resident in Spain as well, unless you can provide evidence to the contrary.”

Residents must report and pay Spanish taxes on income earned worldwide.

IRPF: Progressive Income Tax in Spain

General income, including salary tax in Spain, is taxed under a progressive system:

These rates apply to residents even when the income comes from Spain or outside Spain.

Tax Filing Deadline

Spanish residents must file their IRPF return between April 1 and June 30 for the income earned the previous year. No extensions are allowed.

Avoiding Double Taxation

For anyone researching US citizens living in Spain taxes, the biggest concern is paying tax twice. The good news is that the U.S. tax system offers a powerful tool to help prevent double taxation. 

Foreign Tax Credit (FTC)

Form 1116: The Foreign Tax Credit provides a dollar-for-dollar credit for income taxes paid to Spain. Since Spain’s tax rates are usually higher than U.S. federal rates, the FTC often eliminates U.S. tax liability entirely.

This credit is the backbone of double tax relief for most U.S. citizens in Spain because it covers earned and passive income, including:

• Salary
• Business income
• Rental income
• Dividends
• Interest

In most cases, the FTC is the primary tool used by Americans in Spain, especially those with higher Spanish income tax obligations.

How the US–Spain Tax Treaty Helps

The US–Spain Tax Treaty coordinates which country has the primary right to tax specific types of income. Key principles include:

• Residents usually pay tax to the country where they live.
• Real estate income is taxed in the country where the property is located and sometimes the country of residence as well.
• Private pensions are generally taxed in the country of residence.
• Employment income is normally taxed in the country where the work is performed, but the country of residence might be taxed as well.

The treaty also contains a saving clause that allows the United States to continue taxing its citizens, but the FEIE and FTC provide effective relief.

Need support optimzing your tax situation? Our team of expert tax lawyers are here to support you at every step.

The Beckham Law: A Strategic Tax Break for New Arrivals

The Beckham Law is one of Spain’s most attractive tax regimes for newcomers. It allows eligible professionals to be taxed as non-residents for their first years in Spain, which can create significant savings for anyone earning a high Spanish salary.

How the Beckham Law Works

Who Can Qualify

You may qualify for the Beckham Law if:

• You have not been a Spanish tax resident in the last five years
• You move to Spain because of a job purpose (causality requirement):
  • For a Spanish companies, the below are the most typical ones:
    • An employment contract with a Spanish company.
    • An international assignment ordered by an employer company to a Spanish company.
    • To be appointed as Director of a Spanish company. If the company is passive, the Director must hold <25% of share capital.
  • For foreign companies:
    • Working remotely as an employee for a non-resident company through the exclusive use of a computer and IT systems. A certificate of coverage to maintain foreign social security contributions is mandatory. 
• The individual does not obtain income that would be classified as being obtained through a permanent establishment located in Spanish territory, except in the cases 4)& 5).

This regime is most beneficial for employees with high salaries who want predictable and lower tax rates.

Note that under certain requirements, the family can also apply for it as a family member of the principal. 

Key Limitations

• You cannot claim standard IRPF personal or family deductions
• Passive income generated in Spain may still be taxed
• The regime cannot be used by most self-employed workers
• Business owners of foreign companies with management roles can create permanent establishment risks in Spain, which will require the companies to pay corporate tax here and the individual will be automatically excluded from the Beckham law. 

Why It Matters

For high-earning professionals reviewing US citizens living in Spain taxes, the Beckham Law can dramatically reduce Spanish tax liability compared to standard progressive IRPF rates that can reach 47 percent.

US and Spanish Compliance Requirements (Beyond Income Tax)

Below is a simple compliance checklist for US citizens living in Spain. If any item applies to you, reporting is mandatory.

Are You Ready to Navigate Your Tax Obligations With Confidence?

Managing taxes as a US citizen living in Spain requires understanding how both systems overlap and how to use the tools that prevent double taxation. Once you know how residency rules work, how IRPF is calculated, and which U.S. forms you must file each year, the process becomes much more manageable.

With the right previous tax planning, you can stay compliant, avoid penalties, and take advantage of tax benefits available to newcomers. If you want support reviewing your tax situation or understanding which obligations apply to you, fill out the form below to speak with a tax lawyer.