Moving to Spain as an American?

Dreaming of living in Spain, perhaps in beautiful Mallorca? If you are an American considering this exciting move, you might be curious about the relocation process and the tax implications involved.

Whether you are seeking a lifestyle change, a new business venture, or a serene retirement spot, Spain could be the ideal destination for you.

The need of a Spanish visa 

Planning a short visit to Spain? If you are a US citizen intending to stay for less than 90 days within a 180-day period for family visits, medical treatment, tourism, or business, you generally will not need a specific visa. However, starting mid-2025, you will need to obtain a visa waiver through the European Travel Information and Authorization System (ETIAS).

For those looking to move to Spain for a longer stay (over 90 days) for work, study, or to establish residence, a long-term visa (Type D Visa) is required. 

Types of long-term visas in Spain

Currently, the Spanish law offers several types of visa depending on the purpose of the visit and stay in Spain.  

Retirement or Non-Lucrative residence visa

This visa allows its holder to reside in Spain without carrying out any revenue making activity. It does not constitute a work permit. 

Employee visa

Individuals aged 16 and above who have a valid labor agreement can apply for this visa. It covers all types of employment, including seasonal work

Self-employed visa

Individuals aged 16 and above who wish to engage in self-employed activities can apply for this type of visa. The process is more complex than the employee visa, as it requires obtaining both a residence permit and a self-employed work permit first.

Golden visa

Foreigners can apply for the Spanish Golden Visa by making substantial capital investments, which include:

• • An initial investment of at least €2 million in Spanish public debt securities, or €1 million in securities of operating Spanish companies, Spanish investment or venture capital funds, or bank deposits in Spanish financial institutions.
  • Purchasing Spanish real estate worth a minimum of €500,000.
  • Undertaking a business project in Spain that is deemed to be of general interest, measured by job creation, socio-economic impact, or significant contributions to scientific or technological innovation.

Digital nomad visa

Foreigners planning to live in Spain as residents and work remotely, either as employees or self-employed, can apply for the Spanish Digital Nomad Visa. Key points to consider are:

• • The digital nomad should work for a foreign company or provide freelance services primarily to foreign clients (Spanish clients should not represent more than 20% of their income)
  • The digital nomad should be a graduate from a well-known university or have extensive professional experience.
  • This visa initially lasts for 3 years and can be easily renewed and converted into permanent residence.

Residence permits in Spain

Upon arrival, any foreigner intending to stay longer than 90 days must apply for a residence permit. This involves obtaining a Foreigner Identity Card, known as NIE. Applications can be made at any Foreigner’s Office or national police station in the Spanish province of residence, by prior appointment.

Would the American pay taxes in Spain as a result of his or her Spanish residency?

Generally, a foreigner would become a Spanish tax resident if he or she stays in the country for more than 183 days in a year. In that case, the individual would be required to pay Spanish taxes on his or her worldwide income. The Personal Income Tax can be quite burdensome, as it is levied on a progressive basis, with the highest rate reaching c. 50%.

Despite the above, expatriates moving to Spain may qualify for a special Personal Income Tax regime, commonly known as the Beckham Law. Under this regime, even though the individual would qualify as a Spanish tax resident, he or she would pay a flat rate of 24% on his or her worldwide labor or professional income up to €600,000. Any income above this amount would be taxed at 47%. Other Spanish-sourced income is taxed progressively from 19% to 28%.

This regime also offers attractive taxation for non-Spanish income that is not related to labor or professional activities, such as passive income (e.g., dividends, interest, etc.). This non-Spanish non-labor income is not subject to tax in Spain.

This special regime can be applied during six fiscal years.

In addition to the special tax regime referred above, depending on the Spanish region of destination, additional tax planning opportunities may be sought which would help to reduce the total Personal Income Tax cost.

The American becoming tax resident in Spain should also consider his or her tax obligations in the USE. In fact, US taxes apply to US citizens and residents, that means that moving to Spain may not preclude the US from
continuing taxing the individual.

There may be some nuances to mitigate said Personal Income Tax in the US, for instance:

• Some tax exemptions on foreign income may be available in the US.
• Under certain circumstances, the US resident may give up his or her US green card, what would be translated into no US Personal Income Tax.
• Similarly to the above, US citizens may give up their US citizenship by getting the citizenship of any other country, what, again, would be translated into no US Personal Income Tax.

Please note that the give up of the US green card and citizenship may trigger exit taxes in the US.

Spain is an attractive destination for US citizens. Moving from the US to Spain involves important administrative processes, such as visa and residence permit applications, as well as tax registrations. At SCML Asesores Fiscales, we invite you to carefully assess your situation and understanding your administrative and tax situation in Spain prior to effectively moving to Spain. You can contact at us at this link or get a free advise in a 30 min call.