How to avoid double taxation when living or investing in Spain

Moving to or investing in Spain can be a dream come true — but if you’re not careful, you could end up paying tax twice on the same income. Here’s how to protect your finances:

1. Understand Spanish Tax Residency

You’re considered a Spanish tax resident if you:

• Spend 183 days or more in Spain during a calendar year, or
• Have your main economic interests (e.g. business, assets) or immediate family (spouse/children) in Spain.

As a tax resident, Spain taxes your worldwide income. Non-residents pay tax only on Spanish-sourced income — such as rental income, capital gains from Spanish assets, or income from business activities in Spain.

2. Use Spain’s Double Taxation Treaties

Spain has tax treaties with many countries (including the US, UK, Canada, and EU Member States) to:

• Prevent you from being taxed twice on the same income.
• Reduce withholding tax on dividends, interest, and royalties.

If you’re a US citizen or resident, you may claim a Foreign Tax Credit on your IRS return for taxes paid in Spain.

3. Consider Special Regimes Like the Beckham Law

Expats working in Spain may qualify for the “Special Tax Regime for Inbound Workers” (commonly known as the Beckham Law), which offers:

• A flat 24% tax rate on Spanish-sourced employment income up to €600,000 (47% on the amount above that)
• Taxation only on your Spanish income.

It’s ideal for high earners, executives, or remote workers on Spanish contracts. To qualify, you must apply within six months of entering Spain and registering with Spanish Social Security. The regime lasts for up to six years.

4. Know tax rates for non-residents

If you own property or earn income in Spain while living elsewhere, you are likely considered a non-resident for tax purposes:

• Rental income: taxed at 19–24% under the Non-Resident Income Tax (IRNR)
• Capital gains: taxed between 19–28%, depending on the amount
• Even vacant properties are subject to a notional rental income tax
• Quarterly and annual filings are mandatory

5. How to avoid double taxation -step by step

1. Confirm your residency status — track your days in Spain and assess your economic ties.
2. File your Spanish taxes first — calculate your liability and obtain proof of payment. US expats can then apply the Foreign Tax Credit.
3. Activate special regimes like the Beckham Law if eligible — it applies a flat tax only on Spanish income.
4. Apply treaty benefits — claim credits or exemptions in your home country for taxes paid in Spain.
5. Get professional advice — tax treaties, cross-border income, and digital nomad structures are complex.

Final takeaways

Spain has solid mechanisms to avoid double taxation, but proactive planning is essential. Start with your residency status, use applicable treaties or regimes, and coordinate your filings in both countries.

Fuster & Associates can help you:

• Clarify your tax residency and thresholds
• Evaluate if the Beckham Law is right for you
• File accurate tax returns in Spain and your country of origin
• Maximise treaty benefits and reduce liabilities

Protect your global income and enjoy your life in Spain — confidently and tax-smart.

We want to help you navigate all the legal complexities that comes to buying or selling a house in Spain, but this article is legal information and should not be seen as legal advice.