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Taxes in Spain vs Taxes in the US

This article is significant for you if you are considering moving to Spain, especially as a US citizen. This article will discuss everything about taxes in Spain, taxes in the US, who is liable to pay taxes in Spain, and more. Read this article till the end to acquire complete information.

Living in Spain is just like living a dream life. Because in Spain you are surrounded by beautiful culture, climate, food and more. But every country in this world charges a compulsory contribution levied by the government, known as taxes.

Only a few countries do not charge taxes to their residents and non-residents. Bermuda, Monaco, the Bahamas, and the United Arab Emirates (UAE) are the only countries that do not charge any personal income tax.

But, this article talks about Spain, which charges taxes to residents and non-residents. Especially if you are a US resident and living in any other country, you must file US expat taxes. If you are living in Spain, you have some tax benefits.

Taxes in Spain

The tax year of Spain starts on 1st January and ends on 31st December. Taxes in Spain have to be paid from 1st May to 30th June by residents and non-residents.

If your yearly earnings in Spain are €22,000  or less than €22,000, which has come from one payer (company), then you are not liable to pay tax, or you are not liable to file a tax return. If it is more than definitely, you have to pay the tax in the given period, economic penalties will be applied.

Who is liable to pay taxes in Spain?

Every individual who is living in Spain, resident or non-resident, is liable to pay taxes in Spain. As we discussed earlier, you must pay the tax if your income is more than €22,000. Now payment of taxes in Spain differs between residents and non-residents.

The following individuals are tax residents if any of the following applies:

  • Living in Spain for 183 days or more in a year
  • Your family member (wife or children) is a Spanish citizen
  • Running a business in Spain

If any of this applies to you, you are a tax resident. If these statements do not apply to you, then you are a non-tax resident. A tax resident has to pay the tax on their worldwide income. Also, they must declare all the assets worth more than €50,000.

If you are a non-tax resident, you must also pay a tax in Spain. The taxes in Spain for non-residents are as follows:

  • Spanish-sourced income tax
  • Property tax (owned in Spain)
  • Wealth tax
  • Tax on investment interest
  • Tax on dividends
  • Capital gains tax for transferred assets.

Taxes in the US

If your earnings are more than $18,800 (if under 65) and more than $20,500 (if 65 or older), you are liable to pay tax in the US. Also, you must pay tax if you own foreign assets worth more than $200,000, excluding your house.

If you are a US citizen living in Spain, you can get various tax benefits while filing US tax bills. Some significant uses are as follows:

  • Foreign Earned Income Exclusion: In this, you can exclude up to $110,000 if you can demonstrate that you are a Spanish citizen.
  • Foreign Tax Credit: In this, you will get a dollar tax credit for every dollar you have already paid as a tax in Spain.

To know more about tax benefits, it is better to contact any Tax lawyer.