Spanish income tax runs higher than US tax at most salary levels, so if you’re employed in Madrid or Barcelona and file a normal Renta, the US return is mostly about claiming the credit and reporting your accounts. Two groups get caught out. People on the Beckham Law assume a 24% flat rate settles everything, and at higher pay it doesn’t. And almost everyone who opens a fondo de inversión or plan de pensiones through a Spanish bank finds out later what the IRS makes of it.
Here’s how it fits together, in the order people usually ask.
Do Americans living in Spain have to file a US tax return?
Yes. The US taxes its citizens and green-card holders on worldwide income wherever they live. The US–Spain treaty’s saving clause (Article 1(3)) keeps it that way, apart from a few exceptions, one of which is the double-tax relief article we’ll come back to. So you file a 1040 as well as your Spanish declaración de la Renta, even when your employer’s monthly withholding already covers your Spanish bill.
Spain treats you as tax resident if you’re there more than 183 days in a calendar year, or if your main base of business or economic interests is in Spain. It also presumes residence when your spouse and minor children live there. Short trips out of the country still count as days in Spain unless you can show you’re tax resident somewhere else. Once resident, Spain taxes your worldwide income too, unless you’re on the Beckham regime.
When are the Spanish Renta and the US return due for 2025?
Both countries use the calendar year, so the figures line up. The deadlines don’t:
- 1
31 March 2026 · Modelo 720 and Modelo 721
Spain’s foreign-asset and foreign-crypto returns for 2025, if you’re over the thresholds.
- 2
15 April 2026 · US tax payment due
Filing can wait; paying late costs interest from this date.
- 3
15 June 2026 · US return, automatic for Americans abroad
Attach a statement that you lived outside the US on 15 April.
- 4
30 June 2026 · Spanish Renta 2025 closes
Filing opened online on 8 April. If you pay by direct debit, the last day is 25 June. Wealth tax returns use the same window.
- 5
15 October 2026 · US return with Form 4868, and the FBAR
File Form 4868 by 15 June. The FBAR extends to 15 October automatically.
The Renta closes two weeks after the US automatic deadline. For anyone with more than a simple salary we extend the 1040 to October and file it from the final Renta, so the credit matches what Spain actually charged.
For currency, use the IRS yearly average rate for 2025, €0.886 per $1, for salary, interest and tax withheld through the year. Sales of shares, funds or property use the rate on the day of the sale.
Foreign tax credit or the exclusion for a Spanish salary?
For most employees in Spain we use the foreign tax credit (Form 1116). Spanish income tax comes in two halves, a state half and a regional half set by your autonomous community. The state scale for 2025 runs from 9.5% to 24.5%. Madrid’s regional scale runs from 8.5% to 20.5%, so the combined top rate there is 45%; Catalonia’s regional top rate of 25.5% takes Barcelona to 50%. At almost any salary that’s more than the US would charge, so the credit wipes out the US tax and the excess carries forward ten years.
The foreign earned income exclusion shelters up to $130,000 of 2025 earnings, but it wastes the extra Spanish tax and stops you funding an IRA. It suits people whose Spanish tax is low, such as a digital nomad in a first part-year. If your employer pays your rent, the housing exclusion can add to it. Under IRS Notice 2025-16 the 2025 cap is $53,300 in Madrid and $40,600 in Barcelona, each less the $20,800 base.
Your Spanish social security contributions aren’t creditable, because the totalization agreement covers them. They don’t reduce your US tax, but they do mean you don’t pay US Social Security on the same pay.
Say you’re single, in Madrid, on €60,000 gross
That’s about $67,720 of wages at the 2025 rate. Your social security comes to roughly €3,900. After that and the €2,000 general deduction for work expenses, your taxable income is about €54,100, and state plus Madrid tax comes to roughly €14,000 (about $15,700).
On the US side, $67,720 less the $15,750 standard deduction leaves $51,970 taxable, and the 2025 tax on that is about $6,350. The Spanish credit covers it with room to spare, so US tax is zero and around $9,400 of credit carries forward. The exclusion would also get you to zero this year, but it leaves nothing in reserve for a year with US-taxed income.
These are rounded figures; your actual Renta depends on your deductions and household.
How does the Beckham Law work with US taxes?
The régimen especial de trabajadores desplazados, known everywhere as the Beckham Law, lets people who move to Spain for work pay Spanish tax almost as non-residents. Employment income is taxed at a flat 24% up to €600,000 and 47% above. Other income is taxed only if it comes from Spain. It runs for the year you arrive plus the next five, you can’t have been Spanish resident in the previous five years, and you opt in on Modelo 149 within six months of starting work in Spain. Since 2023 it’s open to remote workers on the digital nomad visa as well as employees, directors and some entrepreneurs.
For the IRS, the 24% is ordinary Spanish income tax and you credit it on Form 1116. The trouble is the rate. For a single filer, US tax on salary passes 24% of the gross at around $327,000, roughly €290,000. Below that the credit usually covers you; above it you owe the IRS the difference every year. And because Spain doesn’t tax your US dividends and gains under the regime, there’s no Spanish tax to set against them. The US taxes them in full, plus the 3.8% net investment income tax once your income is over $200,000.
Take Daniel, a sales director in Barcelona on the Beckham Law
Daniel earns €250,000 (about $282,170) and has a Vanguard account that paid $10,000 of qualified dividends. Spain charges 24% of his salary, €60,000 or about $67,720, and nothing on the dividends.
US tax on his salary is about $62,800, so the Spanish credit covers it with roughly $4,900 to spare. The dividends are another story. They’re US-source and untaxed in Spain, so he owes about $1,500 at the 15% rate plus $380 of net investment income tax, around $1,880 in all. The spare salary credit can’t help, because it sits in a different basket.
At €400,000 the picture changes. Spain takes €96,000 (about $108,000), while US tax on the salary is close to $122,000, so Daniel would owe the IRS about $14,000 on his pay as well.
One more point for Beckham taxpayers: Spain doesn’t require Modelo 720 while you’re in the regime, but the FBAR and Form 8938 apply exactly as before.
Does Spain tax my US investments and pensions?
If you’re an ordinary Spanish resident, yes, and this is where Spain differs from France. The treaty only obliges Spain to credit US tax the US could charge a non-American. On US dividends that’s the 15% treaty withholding. Spain taxes the dividend at its savings rates (19% on the first €6,000, 21% to €50,000, 23% to €200,000, 27% to €300,000 and 30% above) and credits the 15%. Article 24(3) then has the US treat the rest as Spanish-source income for your foreign tax credit, so you aren’t taxed twice, but you pay at Spain’s rate rather than the US one.
Pensions follow Article 20. A private pension such as a 401(k), IRA or US company pension is taxable in Spain as your country of residence; the US still taxes it because you’re a citizen and credits the Spanish tax. Social security can be taxed by the paying country, and Spain counts it as a resident’s income too, so US Social Security and a Spanish pensión de jubilación both end up on both returns with a credit. Spain doesn’t clearly recognise a Roth’s tax-free status, so we check the Spanish cost before you take money out of one.
The totalization agreement keeps you in one social security system. Employees of Spanish companies and autónomos who live in Spain pay into Spain and attach a certificate of coverage to the 1040 to stay clear of US self-employment tax. A US employer sending you over for up to five years can usually keep you in US Social Security instead.
What happens to Spanish funds, pension plans and bank accounts on a US return?
Spanish banks sell the same short list of products to everyone. For an American, most of them are a problem.
| Spanish product | In Spain | On your US return |
|---|---|---|
| Cuenta corriente, depósito a plazo | Interest taxed at savings rates | Interest taxable; Spanish tax credited |
| Fondos de inversión, Spanish or EU ETFs | Taxed only on redemption; a traspaso to another fund is tax-free | Usually PFICs: Form 8621 each, and a traspaso counts as a sale |
| Plan de pensiones (individual or employer) | Contributions deductible within limits; taxed as work income on payout | Unsettled; see below |
| Unit-linked insurance, PIAS | Deferral until surrender | Often a non-qualifying policy, with PFIC funds inside |
| Shares held directly | Dividends and gains at savings rates | Straightforward; Spanish tax credited |
A PFIC (passive foreign investment company) is how the US classifies nearly every non-US pooled fund. Without an election, a sale or large distribution is spread back over your holding years, taxed at the top US rate for each and charged interest. The usual fix for listed ETFs is the mark-to-market election, which taxes the yearly rise as ordinary income.
The traspaso is the Spanish quirk to watch. Moving money between funds is the standard Spanish way to defer tax, and your bank will suggest it freely. The IRS sees a sale of one PFIC and a purchase of another, and taxes the gain.
Before you sign anything at the bank
Tell your bank’s adviser you’re American before opening an investment. Shares held directly, a plain deposit or a US brokerage account are easy on a US return. Spanish funds, unit-linked insurance and a plan de pensiones cost real money and paperwork every year.
Is a Spanish plan de pensiones treated as a pension by the IRS?
Not cleanly, and this is the area where practitioners genuinely disagree. The treaty doesn’t give Spanish plans any US deferral, so the Spanish deduction for contributions doesn’t carry over to your 1040, and employer contributions are generally taxable US wages when made. Beyond that, some advisers treat a plan as a foreign trust with Forms 3520 and 3520-A, some look through to the funds inside as PFICs, and some report it as a nonqualified foreign pension taxed on payout.
Our lean: we treat employer plans as nonqualified employer plans, taxing contributions as they go in and reporting the account on the FBAR and Form 8938. For an individual plan where you picked the funds, we look harder at the PFIC route. Whichever position we take, it has to stay the same every year. For new money, a US IRA (if you use the credit, not the exclusion) is usually the cleaner way to save.
Does Spanish wealth tax affect my US return?
Not directly. Spain’s Impuesto sobre el Patrimonio is run region by region. The state default ignores the first €700,000 of net wealth plus up to €300,000 of your main home, and Madrid gives a full rebate. The state solidarity tax on large fortunes then catches net wealth over €3 million everywhere, at 1.7% to 3.5%, after credit for any regional wealth tax. Neither is an income tax, so neither is creditable on your 1040. Under the Beckham Law both apply only to assets in Spain.
What happens when I sell my home in Spain?
Spain taxes the gain at the savings rates unless it’s exempt. It’s exempt if you’re over 65 and it was your main home for at least three years, or if you reinvest the proceeds in a new main home within two years. The US runs its own calculation in dollars, cost at the purchase-date rate and proceeds at the sale-date rate. The §121 exclusion of $250,000 ($500,000 joint) covers most main homes, but a stronger euro can create a US gain Spain never sees, and paying off a euro mortgage can create a separate currency gain or loss. If it was a rental or a holiday home, the US gain is fully taxable, with credit for Spanish tax on it.
Which Spanish accounts do I report, and how does Modelo 720 compare?
If your non-US accounts together topped $10,000 at any point in 2025, you file an FBAR listing every one, including the plan de pensiones and any unit-linked policy. Form 8938 applies on top once foreign financial assets pass $200,000 at year-end or $300,000 at any time ($400,000 or $600,000 married filing jointly).
Spain runs the mirror image. Modelo 720 lists assets outside Spain, which means your US bank, brokerage and IRA accounts, once any of three blocks passes €50,000: accounts, securities and insurance, or real estate. Crypto held on exchanges outside Spain goes on Modelo 721 above €50,000. After the first filing you only refile when a block grows by more than €20,000 or an account closes. The old €10,000-per-item fines and the 150% penalty were dropped in 2022 after the EU Court of Justice struck them down, so a late 720 is now treated like any other late informational return.
If you’ve never filed US returns from Spain, the Streamlined procedure usually fixes it with three years of returns and six years of FBARs.
What we’d do for you
We’d start from your Renta (or your Modelo 151 if you’re on the Beckham Law), check whether the credit really covers your US tax, and then go through your Spanish bank products one at a time, because that’s where the US bill usually hides. If you left a US state recently, we check whether it still treats you as resident (see our state tax guide). For the rules that apply in every country, our US expat tax guide has the detail.