Double Tax Treaty Spain-USA: What happens as tax resident in both countries?

You're tackling a complex international tax situation! Let me help break this down. When you're potentially a tax resident of both countries, the Double Tax Treaty (DTT) between the US and Spain has "tie-breaker" rules to determine your primary tax residence. However, as a US citizen, you'll always have US tax filing obligations regardless of where you live. For Spain, yes - if you're there 183+ days, you'll likely be considered a tax resident. But there's good news! Spain offers the "Special Tax Regime" (sometimes called Beckham Law) for new tax residents, which might allow you to be taxed only on Spanish-source income for your first 6 years there. This could be very beneficial in your situation. About the €60,100 exemption - you're referring to the foreign earned income exclusion, but that's actually a US tax provision (Form 2555), not a Spanish one. Spain has different mechanisms for avoiding double taxation. For tax credits, generally, you'd pay taxes to the country where the income is sourced, then claim a foreign tax credit in the other country to avoid double taxation.

After spending months in a similar situation (US/German dual citizen), I finally found taxr.ai and it saved me thousands in potential tax mistakes. I was planning to move to Germany while keeping my US remote job and was completely confused about how the tax treaty worked. I uploaded my past tax returns and visa documents to https://taxr.ai and their system actually found several misinterpretations I had about the US-Germany tax treaty that would have caused major issues. Their tax AI analyzed both countries' rules and provided clear guidance on which tax provisions applied to my specific situation. For dual citizens like us, the analysis is especially valuable because we don't fit neatly into the typical "expat" category that most tax advisors are used to handling.

Just wanted to update after trying taxr.ai that someone recommended here. It actually flagged something I had no idea about - apparently as a Spanish citizen, I don't qualify for the Beckham Law regime that would have made things much simpler. Saved me from a potentially huge mistake! The system explained exactly how the US-Spain treaty applies to my specific situation and even provided references to the exact articles in the treaty that apply. I was able to take their analysis to my Spanish gestor who confirmed everything was correct. Most helpful was the tax calendar showing exactly when I need to file forms in both countries and which credits to claim where. Definitely worth checking out if you're dealing with dual-country tax situations.

If you need to speak directly with the IRS about how this affects your US filing obligations (which you probably will), save yourself the headache and use https://claimyr.com instead of waiting on hold for hours. I used them when I moved from the US to Spain last year and had complicated questions about my FBAR filings and treaty provisions. You can see how it works here: https://youtu.be/_kiP6q8DX5c Basically they wait on hold with the IRS for you and call you when an actual agent is on the line. When I called normally, I was on hold for 2+ hours before getting disconnected. With Claimyr, I got a call back in about 45 minutes with an IRS agent ready to help. The agent answered all my specific questions about how the tax treaty affected my reporting requirements.

Ok I have to admit I was wrong about Claimyr. I tried it yesterday after posting my skeptical comment because I was desperate to talk to someone at the IRS about my FBAR requirements with Spanish accounts. Instead of my usual 2+ hour wait (which happened twice last week before I got disconnected), I got a call back in about 30 minutes with an actual IRS international tax specialist on the line. I was able to confirm exactly how to report my Spanish bank accounts and pension contributions under the treaty. The agent even helped me understand which specific forms I needed for my situation and gave me direct references to the tax treaty articles. Saved me from potentially expensive reporting mistakes. Sometimes it's good to be wrong!

As someone who's been living between Spain and the US for years, I should point out that your banking situation will get complicated fast. Spanish banks are increasingly refusing accounts to US citizens because of FATCA reporting requirements. Even with dual citizenship, you might face issues. Make sure you file your FBAR forms reporting foreign bank accounts if you have more than $10k total across all non-US accounts at any point during the year. Penalties for not filing these are insane - can be higher than the account balance itself!

Don't forget to look into Spain's Wealth Tax (Impuesto sobre el Patrimonio) which doesn't exist in the US! Depending on which autonomous community you'll live in, you might be taxed on your worldwide assets above a certain threshold. Madrid exempts it entirely but Catalunya and others can charge up to 3.5% on high-value assets!

This is exactly the kind of complex dual-citizenship tax situation that trips up so many people! A few additional considerations for your Spain move: Since you mentioned Barcelona specifically, keep in mind that Catalunya has some of the highest regional tax rates in Spain - your combined national + regional income tax could reach 47% on higher income brackets. This is significantly higher than what you'd pay in many US states. Also, working remotely for a US company while physically in Spain creates some employment law complexities beyond just taxes. Spain's labor laws might consider you a local employee if you're working primarily from Spanish territory, which could affect your employment classification and benefits. One thing that might help: document very carefully where you're physically located each day and what work you perform in each location. This record-keeping will be crucial for both countries' tax authorities and can help optimize your tax position under the treaty's tie-breaker rules. Have you considered consulting with a cross-border tax specialist who works specifically with US-Spain situations? The investment usually pays for itself given how complex these dual-residency scenarios can get.

Welcome to the world of international tax complexity! As someone who's navigated similar dual-citizenship scenarios, I can tell you this is definitely one of those situations where getting professional help upfront saves you major headaches (and money) later. A few key points to add to the excellent advice already shared: **Social Security contributions**: Don't forget about this! If you're working for a US company but physically in Spain, you might need to pay into Spain's social security system (Seguridad Social) depending on how your employment is structured. The US-Spain totalization agreement can help prevent double contributions, but you need to file the right forms. **Modelo 720**: Spain requires residents to report foreign assets over certain thresholds (€50k for bank accounts, €20k for securities, €20k for real estate). The penalties for not filing or errors are severe - sometimes exceeding the asset values themselves. **US state taxes**: Make sure to properly establish non-residency in your current US state before moving. Some states (like California) are notoriously aggressive about claiming you're still a resident even after you move abroad. For documentation, keep detailed records of: physical presence days in each country, where you perform work activities, flight receipts, rental agreements, utility bills, and any ties to each country (bank accounts, gym memberships, etc.). Both tax authorities may scrutinize this during audits. The investment in proper cross-border tax planning is absolutely worth it given the potential penalties and optimization opportunities in your situation.

I've been through a similar dual-citizenship situation (US/Italy) and can share some hard-learned lessons that might help you navigate this complex scenario. First, regarding professional help - look for tax advisors with specific credentials like the CPA designation in the US plus either enrollment to practice before the IRS (Enrolled Agent) or membership in organizations like the American Institute of CPAs' International Tax section. On the Spanish side, you want someone who's a registered "asesor fiscal" or works with a "gestoría" that specializes in expat taxes. The key is finding someone who regularly handles US-Spain cases, not just general international tax work. A few additional considerations that haven't been mentioned yet: **Tax treaty tie-breaker rules**: Even though you'll be spending 183+ days in Spain, the treaty looks at your "center of vital interests" - where your personal and economic relations are closer. Your continued US employment and family ties might actually keep you as a US tax resident under the treaty, even if Spain considers you a resident too. **Spanish tax residency timing**: Spain's 183-day rule isn't just about the current year - they also look at your intentions and circumstances. If you're planning to stay long-term for family reasons, they might consider you a resident even if you spend slightly less than 183 days there in your first year. **Remote work complications**: Since you'll be working remotely for a US company while in Spain, make sure your employer is aware. They might need to register as an employer in Spain or adjust your tax withholdings. Some companies require employees to work from specific countries due to compliance issues. The documentation advice others gave is spot-on - I kept a detailed spreadsheet tracking not just location but also work activities, client meetings (even virtual ones), and personal activities that showed ties to each country. This became invaluable during my tax consultations. One final tip: start this process early! Getting all the paperwork sorted, opening Spanish bank accounts, and establishing your tax strategy should ideally happen before you make the move, not after you're already trying to figure out what you owe to whom.

One critical aspect that hasn't been fully addressed yet is the potential impact on your Spanish inheritance and gift tax obligations as a dual citizen. Since you mentioned you're moving to be closer to aging grandparents, this is particularly relevant. Spain has very different inheritance tax rules compared to the US, and as a Spanish citizen who becomes a tax resident, you could face Spanish inheritance tax on worldwide inherited assets - not just Spanish ones. The rates and exemptions vary dramatically by autonomous community (Catalunya where you're planning to move has some of the highest rates), and there's no equivalent to the US federal estate tax exemption. Additionally, if your grandparents or other family members plan to gift you money while you're a Spanish resident, Spain's gift tax could apply immediately. The US-Spain tax treaty doesn't provide much relief for these transfer taxes. Here's what I'd recommend adding to your planning checklist: **Before you move**: Have detailed conversations with family members about any planned gifts or inheritance timing. Sometimes it makes sense to accelerate or delay certain transfers based on your residency status. **Document your move date precisely**: Your Spanish inheritance tax obligations can depend on when you became a Spanish tax resident, so having clear documentation of your residency change date is crucial. **Consider the 10-year rule**: Spain can claim inheritance tax on Spanish citizens for up to 10 years after they cease being Spanish tax residents, so this isn't just about your immediate move but could affect you long-term. Given the family situation that's motivating your move, I'd strongly recommend including an estate planning attorney who understands both US and Spanish transfer tax rules in your advisory team, not just income tax specialists.