Double Tax Treaty Between Spain and USA - How To Apply if Tax Resident in Both Countries?

This is a classic dual residency situation that the Spain-US tax treaty specifically addresses. Since you'll be physically present in Spain for 183+ days, Spain will likely consider you a tax resident. But the US taxes based on citizenship, so you're still fully liable there too. Under the treaty, you'll need to determine your "tie-breaker" status - which country has primary taxing rights. Based on what you've shared (family in US, renting in Spain), the US might actually retain primary residence status, but it's a complex determination based on your "center of vital interests." For your US taxes, you'll file as normal but can use the Foreign Earned Income Exclusion (FEIE) for income earned while physically in Spain (up to $126,500 for 2024) or the Foreign Tax Credit to avoid double taxation. For Spanish taxes, you'll report worldwide income but claim credit for taxes paid to the US. Regarding the 60,100€ deduction - you might be referring to Spain's "Beckham Law" special tax regime for new residents, which allows qualifying individuals to be taxed as non-residents for 5 years. This limits taxation to Spanish-source income at a flat 24% rate up to 600,000€.

Had a similar situation last year when I moved to Barcelona but kept working for my US tech company. I struggled with all the tax forms until I found https://taxr.ai which literally saved me thousands. They analyzed my specific situation with the US-Spain tax treaty and showed me exactly how to avoid double taxation. Their system automatically flagged that I qualified for the Foreign Earned Income Exclusion under the bona fide residence test, even though I was coming back to the US every couple months. They also helped me understand how the Spanish Modelo 720 foreign asset reporting works, which I had no idea about before.

Just wanted to follow up and say I ended up using https://taxr.ai after seeing this thread! I was in a similar situation moving to Madrid while working for a US company. The analysis they provided was incredibly detailed - way beyond what my regular accountant could offer. They specifically identified that I needed to look at Article 4 of the US-Spain tax treaty for the tie-breaker rules and showed me how to document my status. They also explained exactly how to handle my 401k contributions and Roth IRA while in Spain (which was super confusing before). The fees were totally worth it considering how much they saved me from potential double taxation. Definitely recommend for anyone dealing with this complicated treaty situation!

I went through this exact situation and spent MONTHS trying to get answers from both the IRS and Agencia Tributaria. Could never get through to anyone knowledgeable about the tax treaty. Then a friend recommended https://claimyr.com and their service got me connected to an actual IRS international tax specialist in less than an hour! You can see how it works here: https://youtu.be/_kiP6q8DX5c The specialist confirmed that I could use Form 1116 to claim credit for taxes paid to Spain, but that I needed to carefully track which income was earned while physically in each country. She also warned that the treaty doesn't cover social security taxes, so I needed to look at the separate Totalization Agreement between the countries.

I have to admit I was totally wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway because I was desperate for answers about my Spain-US tax situation. Got connected to an IRS agent in about 40 minutes (after previously trying for WEEKS on my own). The agent walked me through exactly how Article 24 of the treaty applied to my situation and confirmed I needed to file Form 8833 to claim certain treaty benefits. She even explained how the Spanish wealth tax might apply to my US assets despite the treaty. Honestly shocked at how helpful this was. Saved me from making some serious mistakes on my returns that could have resulted in penalties from both countries.

One thing nobody's mentioned yet is that if you're earning over the FEIE limit (which is likely if you're at a decent US company), you really need to look at Form 1116 Foreign Tax Credits in detail. Spain's tax rates are generally higher than US rates, so you'll probably end up with excess credits. I did the Spain move in 2022 and the most complex part was actually tracking which income was earned while physically in each country. I created a spreadsheet with my travel dates and calculated percentages of income earned in each place.

Honestly the 60,100€ exemption you mentioned sounds like the Beckham Law (Special Impatriate Tax Regime), but I don't think you'd qualify based on what you described. You need to be moving to Spain specifically because a Spanish company hired you or your foreign company formally transferred you there. Working remotely for a US company usually doesn't qualify unless there's an actual formal assignment letter and the company has some presence in Spain.

I'm actually going through something similar right now - dual citizen planning to move to Madrid while keeping my US job. One thing I haven't seen mentioned is the timing aspect. Since both countries use calendar years, you'll want to be really careful about when you establish Spanish tax residency within the year. If you move mid-year, you might be able to split your tax obligations - paying US taxes on income earned before becoming a Spanish resident, and then dealing with the treaty provisions only for the period after establishing residency. This could potentially simplify your first year's filings. Also, don't forget about state taxes if you're currently in a state with income tax. You'll need to establish that you've truly severed ties with your home state to avoid triple taxation (federal, state, and Spanish). Some states are notoriously aggressive about claiming you're still a resident even after moving abroad. Have you considered consulting with a tax advisor who specializes in US-Spain cases? The treaty is complex enough that the cost of professional help often pays for itself in avoiding mistakes.