About how much do American expats retired in Spain pay in taxes from retirement income (interest income, social security, pension…)? Thanks! We plan to continue to have our American bank and they’ll wire our monthly retirement benefits as well as interest income to our Spanish bank account (that’s what we want to live on in Spain) without touching our principle savings/investments in the USA. I’d appreciate any feedback.


Once a Spanish tax resident, Spain will tax your worldwide income unless exempt by law or treaty.

The most common income that Spain exempts from taxation is pensions from government services under Article 21.2.a of the treaty but NOT if you are a Spanish citizen.

Spain does not recognize IRAs as pensions.
People asks about US Social Security. No, US Social Security is NOT exempt from tax in Spain, already decided with Resolution Vinculante V1841-13 of June 5th 2013. No, US Social Security is NOT a pension from government service.

Spain, like the US offers standard deductions in their tax declaration. They are different depending on your situation, so to know what applies to you a tax simulation is necessary.

Assuming none of your pensions are from government service, and that all your income will be taxed, then how much tax? Well, how much income will you receive and from where? Ordinary income tax rates go from 19% to 45%. And investment income (interest, dividends, capital gains) tax rate goes from 19% to 28%.

For most people, their tax burden will be higher than if they stay in the US, but it will not be double, it will be incremental as the US allows tax credit for taxes paid to Spain.

A logistical problem arises if the payers of US income are withholding. You will need cash to pay the Spanish tax, you need to file your Spanish tax return before you file your US tax return, you must pay the Spanish tax while you still might be waiting for the US refund. This can be minimized or eliminated by filing the right forms with the payers of the US income so that they do not withhold.

The tax credit claimed in the US are claimed in buckets, you cannot claim a general credit for all taxes. There are limitations, floors, thresholds, etc.; but if done right, you can reduce your US tax to zero or close to zero.

Incorrect tax positions: some people either out of incompetence, misunderstanding or greed are trying to sell US expats bad ideas.

  • You cannot get a Certificate of US Tax Residence to claim that you do not owe taxes in Spain because you are a US tax resident. US citizens, we are ALL US tax residents, this certificate has limited applicability for people who are really NON-residents of Spain but have Spanish sourced income.
  • You cannot leave for Portugal or France on December 26 to avoid being in Spain more than 183 days. Those are temporary absences, and you are doing it for the purpose of breaking the tax laws.


It is tough to address every point. The best is an individual consultation followed by a tax simulation on both sides.

For more into, email

I have been doing US taxes for over a decade and expat taxes for over 7 years. I am an Enrolled Agent and a US Tax Court Practitioner.